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HomeMy WebLinkAbout2014 - Department of Finance - Comprehensive Annual Financial Report City of Lansing, Michigan cHIG � Year Ended Comprehensive June 30, 2014 Annual Financial Report Prepared by: Department of Finance Finance Director Angela Bennett Accounting Manager Randy Endsley CITY OF LANSING, MICHIGAN Table of Contents Page INTRODUCTORY SECTION 1 Elected and Appointed Officers 2 Letter of Transmittal 3 Table of Organization 8 GFOA Certificate of Achievement 9 FINANCIAL SECTION 11 Independent Auditors' Report 13 Management's Discussion and Analysis 17 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 32 Statement of Activities 33 Fund Financial Statements: Balance Sheet - Governmental Funds 38 Reconciliation of Fund Balances of Governmental Funds to Net Position of Governmental Activities 39 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 40 Reconciliation of Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities 41 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: General Fund 42 Statement of Net Position - Proprietary Funds 46 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 47 Statement of Cash Flows - Proprietary Funds 48 Statement of Fiduciary Net Position - Fiduciary Funds 52 Statement of Changes in Fiduciary Net Position - Pension and Other Postemployment Benefits Trust Funds 53 Combining Statement of Net Position - Discretely Presented Component Units 58 Combining Statement of Activities - Discretely Presented Component Units 60 Notes to Financial Statements 61 CITY OF LANSING, MICHIGAN Table of Contents Page Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios - Employees' Retirement System 116 Schedule of the Net Pension Liability - Employees' Retirement System 117 Schedule of Contributions - Employees' Retirement System 118 Schedule of Investment Returns - Employees' Retirement System 119 Schedule of Changes in Net Pension Liability and Related Ratios - Police and Fire Retirement System 120 Schedule of the Net Pension Liability - Police and Fire Retirement System 121 Schedule of Contributions - Police and Fire Retirement System 122 Schedule of Investment Returns - Police and Fire Retirement System 123 Schedule of Funding Progress - Other Postemployment Benefit Plans 124 Schedule of Employer Contributions - Other Postemployment Benefit Plans 124 Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds 126 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 127 Combining Balance Sheet - Nonmajor Special Revenue Funds 130 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 132 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds 134 Combining Balance Sheet - Nonmajor Debt Service Funds 142 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds 143 Combining Balance Sheet - Nonmajor Capital Projects Funds 146 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Projects Funds 148 Combining Balance Sheet - Nonmajor Permanent Funds 152 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Permanent Funds 153 Nonmajor Enterprise Funds: Combining Statement of Net Position - Nonmajor Enterprise Funds 156 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Nonmajor Enterprise Funds 157 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 158 Internal Service Funds: Combining Statement of Net Position - Internal Service Funds 162 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Internal Service Funds 163 Combining Statement of Cash Flows - Internal Service Funds 164 CITY OF LANSING, MICHIGAN Table of Contents Page Agency Funds: Combining Statement of Fiduciary Assets and Liabilities - Agency Funds 168 Combining Statement of Changes in Fiduciary Assets and Liabilities - Agency Funds 169 STATISTICAL SECTION (UNAUDITED) 171 TABLE 1 Net Assets / Net Position by Component 175 2 Change in Net Assets / Net Position 176 3 Fund Balances, Governmental Funds 178 4 Changes in Fund Balances of Governmental Funds 179 5 Assessed and Estimated Actual Value of Taxable Property 180 6 Direct and Overlapping Property Tax Rates 181 7 Profile of Ten Largest Ad Valorem Taxpayers 182 8 Property Tax Levies and Collections 183 9 Ratios of Outstanding Debt by Type 184 10 Ratios of General Bonded Debt Outstanding 185 11 Direct and Overlapping Governmental Activities Debt 186 12 Legal Debt Margin Information 187 13 Pledged-Revenue Coverage 188 14 Demographic and Economic Statistics 189 15 Principal Employers 190 16 Full-Time Equivalent City Governmental Employees by Function/Program 191 17 Operating Indicators by Function/Program 192 18 Capital Asset Statistics by Function/Program 193 INTRODUCTORY SECTION 1 CITY OF LANSING, MICHIGAN ELECTED AND APPOINTED OFFICERS For the Year Ended June 30, 2014 MAYOR Virg Bernero CLERK Chris Swope DISTRICT COURT JUDGES Louise Alderson Patrick F. Cherry Hugh B. Clarke, Jr. Frank J. Deluca Charles F. Filice CITY COUNCIL AT LARGE BY WARDS Judi Brown Clarke Jody Washington - 1 st Ward Kathie Dunbar Tina Houghton - 2nd Ward Derrick Quinney A'Lynne Boles - 3rd Ward Carol Wood Jessica Yorko - 4th Ward OFFICERS Randy Hannan Executive Assistant/Chief of Staff Chad Gamble Chief Operating Officer/Public Service Director Janene McIntyre City Attorney Angela Bennett Finance Director William Fowler City Assessor Antonia Kraus City Treasurer Terri Taylor Human Resources Director Randy Talifarro Fire Chief Michael Yankowski Police Chief Joan Jackson Johnson Human Relations Et Community Services Director Brett Kaschinske Parks Et Recreation Director Robert Johnson Planning Et Neighborhood Development Director Jim DeLine Internal Auditor 2 FINANCE DEPARTMENT 124 W. Michigan Ave.: 8' Floor Lansing, Michigan 48933 (51Tj 4834500 61 December 19, 2014 Council President A'Lynne Boles and Council Members 10th Floor City Hall Lansing, Michigan 48933-1694 Dear President Boles and Council Members: We are pleased to submit the comprehensive annual financial report of the City of Lansing, Michigan for the fiscal year ended June 30, 2014. The City assumes full responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations government wide and of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The City's fiscal year 2013/2014 financial statements have been audited by Rehmann Robson, an independent firm of licensed, certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements for the City of Lansing for the fiscal year-ended June 30, 2014, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures contained in the financial statements; assessing the accounting principles used; and evaluating the overall financial statement presentation. The independent audit concluded with the rendering of an unmodified opinion on the statements, meaning the financial statements present, fairly and accurately in all material respects, the financial position of the City in conformity with Generally Accepted Accounting Principles ("GAAP"). The independent auditors repot is presented as the first component of the financial section of this report. This letter of transmittal is designed to complement the Management Discussion and Analysis (MDItA) and should be read in conjunction with it. The Management Discussion and Analysis can be found immediately following the Independent Auditor Report. Profile of the City of Lansing Serving as Michigan's capital since 1848, the City of Lansing was incorporated in 1859 and operates under provisions of Public Act 279 of 1909, as amended (the "Home Rule City Act"). The City incorporates 34.7 square miles and is located in the lower middle of Michigan's Lower Peninsula and operates under a strong mayor form of government established by 1978 Charter revision. 3 Lansing is a mature core city with a population of 114,297, according to the 2010 census, and offers a full range of services. During the fiscal year ended June 30, 2014, the City operated police headquarters and a precinct with over 190 sworn police officers; six fire stations with a fire protection force of over 170; over 350 miles of sanitary sewers, 230 miles of storm sewers, and 180 miles of combined sewers; over 400 miles of roads; 113 parks; a District Court; and support for human services and cultural events. The City's main sources of revenue are property taxes, income taxes, State revenue sharing, Federal entitlement grants, and charges for services, including utility billings. Reporting Entity The financial reporting entity (the City) includes all of the funds and of the primary government (i.e., the City as legally defined), as well as its blended component units. Blended component units, although legally separate entities, are, in substance, part of the primary government's operations and are included as part of the primary government. The Lansing Building Authority is a blended component unit. Discretely presented component units are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the primary government and to differentiate their financial position, results of operations and cash flows from those of the primary government. The Lansing Entertainment Et Public Facilities Authority, Tax Increment Finance Authority, Brownfield Redevelopment Authority, and Smart Zone are reported as a discretely presented component units. Financial Management and Control Management of the City of Lansing is responsible for establishing and maintaining internal controls designed to ensure that the assets of the government are protected from loss, theft, or misuse and to assure that adequate accounting data is compiled to allow for the accurate presentation of financial statements in conformity with generally accepted accounting principles. To provide a reasonable basis for making these presentations, management has established a comprehensive system of internal controls designed to reasonably ensure that assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of these financial statements in conformity with generally accepted accounting principles. Such controls include appropriate policies and procedures, ongoing risk assessment, and monitoring and review processes which are communicated throughout City operations. Because the cost of internal controls generally should not outweigh their benefits, the City's framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that these objectives are met. Because the City is a recipient of federal grant dollars, the independent audit of the financial statements of the City of Lansing was part of a broader, federally-mandated "single audit" in conformity with the provisions of the Single Audit Act of 1996 and the U.S. Office of Management and Budget Circular A-133, Audits of States. Local Governments, and Non-profit Organizations. The standards governing the single audits require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements involving the administration of the federal awards. These reports are available in the City's separately-issued Single Audit Report. Financial results and applicable policies affecting year-end results for the fiscal year-ended June 30, 2014 are discussed in the Management Discussion and Analysis (MDEtA), located immediately following the Independent Auditor Report. 4 Budgeting Controls The annual budget serves as the foundation for the City's financial planning, policy-making, and control. The City Charter requires that the Mayor submit to the City Council a proposed budget by the fourth Monday in March. Budgetary controls and limitations are noted in the Note Disclosure Section of the financial statements. The City also maintains an encumbrance accounting system, whereby purchase orders amounts are deducted from the available budget, as one technique of accomplishing budgetary control. Encumbered amounts lapse at year end and require Council approval to be carried forward to the ensuing fiscal year for amounts greater than $5,000 or greater than eight months old. Economic Condition and Outlook Aggressive economic development activities have resulted in a number of economic projects that have happened in 2014, resulting in more than 1,400 new direct jobs and equating to $528 billion in investments. Several more are slated to break ground in 2015. Though not in the City of Lansing, it is critical to note that Michigan State University (MSU) is on the border of Lansing. MSU recently broke ground on the $550 million Facility for Rare Isotope Beams (particle acceleration), one of the world's most high tech machines. It has already attracted to the city and region 200 of the world's top nuclear physics minds, and promises up to a 1000. MSU is ranked as the #1 nuclear physics program in the country, one spot ahead of M.I.T., according to US News and World Report. Niowave, a spin-off of MSU's accelerator work, is an example as to how MSU financially benefits the City. The City has two major General Motors (GM) plants. During 2013/2014, GM made several significant announcements for its Lansing plants: Construction of a 400,000 square foot, $40 million, 200 new job Logistics Center to be built as part of their Grand River Lansing Car Assembly plant. Plant will be ready for 2015. Construction of a new stamping plant, investment valued at $162 million and 65 additional jobs. Re-location of the Camaro production from Canada to the City's Grand River Car Assembly plant. This will move the plant from the current two to three round the clock, full shifts and more. 600 - 1000 new jobs. The two new facilities (Logistics, Stamping) and employees should be fully in operation in July 1015. The Outfield development, a $27.6 mixed development featuring four stories of apartments located in the outfield of Lansing's Cooley Law School Stadium, as well as improvements to the stadium, was announced. The projected will commence the summer of 2014 and is expected to be completed by the spring of 2016. Niowave announced a 50,000 square foot, $202 million medical isotope production facility in the City of Lansing. 127 jobs and $60,000 average wage will be created. Construction is slated to begin in the fall of 2014. This $3 billion cutting edge, pharmaceutical industry is produced primarily in Europe and Canada, thus this facility is one of America's first. In addition to this, Niowave has completed its Prototype Development/Research and Development building, adding 25 jobs at average salary of $60,000 with over $10 million in machinery and equipment. Jackson National Life, a Fortune 500 company and the nation's #1 individual annuities company, has announced that they will double the size of their national headquarters in the City of Lansing, adding $114 million in new structure as well as adding 1000 new, very high paying, white collar jobs. Construction should begin in the spring of 2014. Average salary for these 1000 new jobs will be $76,000 - all within the City. 5 The downtown Knapp's department store, a $36 million rehabilitation project that will create over 100 jobs as well as fully redeveloping an entire city block. This building and block have been abandoned and unused for several decades. It will also house the City's new Fashion Incubator, called the Runway, which is attracting interest from over 36 tenants across Michigan. The newly-renovated Knapp's building is poised to open in the fall of 2014. In partnership with the City, the Sault Ste. Marie Tribe of Chippewa Indians announced plans for a 125,000 square-foot Kewadin tribal casino to be located next to the City's convention center. The casino is planned to have 3,000 slot machines and 48 gambling tables and is projected to generate 1,500 jobs. Revenue sharing from the operations of the casino are planned to fund four-year college scholarships for Lansing School District graduates, modeled after the Kalamazoo Promise. The development has met some legal challenges, but is progressing. The Market Place project's steel is now constructed. This $10 million market rate, mixed use/residential building is the City's first on its downtown riverfront. It will bring 80 units on line and is Phase I of two more phases to be completed in the next five years. It will open in the late fall 2014. The MidTown market rate, mixed use residential building's foundation is in place and will be completed by early 2015. Located on Michigan Avenue, at the border of Lansing, East Lansing and Michigan State University, it is targeting the ever-growing Chinese population of Michigan State University, with nearly 100 units as well as a PNC bank branch on the first floor. The "Red Cedar Renaissance" mixed use project was announced in 2013. This signature project was put together by one of North America's top developers, Continental Groups. The $200 million, 1,000-job-and- resident project will develop the former City-owned Red Cedar Golf Course and act as a catalyst for the entire Michigan Avenue corridor, which connects, Lansing, East Lansing, the Capitol building of Michigan and Michigan State University. The publicly-owned utility Lansing Board of Water and Light completed and opened its $180 million co- generation natural gas plant in Lansing's REO Town. It also moved its corporate headquarters and 180 employees to this new site, sparking a whole revitalization effort within the REO Town area of Lansing. The plant recently received recognition by the Pew Institute as one of the "cleanest and most efficient" energy facilities in the nation and "Best Project of the Year" by Engineering News-Record Midwest magazine. The Sabori project is rehabilitating the former Heeb Building property and building a new $3 million mixed use development in Lansing's Old Town. The High Grade project will demolish a decades-old blighted building and silos in the City and construct a new, efficient $2 million plant. Lansing is an environment of high-growth and a good return on investment. Lansing is poised to benefit from the new generation of young people, entrepreneurs and new economy businesses who are now demanding an urban environment for living and working. Its economy is diverse; its work force creative. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2013. This was the 36th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. 6 Preparation of this comprehensive annual financial report was made possible by the dedicated service of the entire staff of the Finance Department, as well as support by other departments. All those who contributed to this document, especially Accounting Manager Randy Endsley, have our sincere appreciation for their contributions made in the preparation of this report and in the financial management of the City. The 36th consecutive GFOA award, recognizing their efforts, is well deserved indeed. Sincerely, Virg Bernero Mayor Angela Bennett Finance Director 7 CITY OF LANSING, MICHIGAN Table of Organization Citizens of Lansing City Clerk City Council Mayor 54-A District Court Inlcmal City AFFumcy'R (AT—or o1T a :�lWil C�Ice Commurdty Rrwnci�nl r sn�aia r•.rr�w Poiicc Irirc Planning& 13conomic Public Parks R. 11-nan Rclnii— Neighborhood Uevelapment Service Recrealiou and Community r;w:v�lopmern. Sar�icrs Patrol suppreaeion RN ing Gmrrornic 1).w.Corp. Road.'Kd—lkll forks Desg.4t g ams Gmn[Wrmng A.mt. Crime It»•cxpyMinn P,—.tion 74ning I.EPF/� gcwerxrl'reatn+enl Recrcatinn Progamx 1l�mnn k•.[:rw.tx cammw ily Policing Code con ph.— 11vua &N�ighbo hiw uo enl�I a xirig,1-. 1 rBAi Z—yling Commm,ily Cenl�R P ira lmamal In.. Dctrn i— Bmergmcy 1.tgml Buildirg Safciy TIFA GroundshWnlermnce Cemeteries Perking Rnfnrcemcnl Parking Sy.9lem Rnei—nng Cmlf Propeny Management rk 1s—rar. Inforntmion Teehnoiogy Finance Human Rox—w Trc ury�Irrmme Tax Recruirmcnl Assexsing Tra nine AC mingS.dgal ltelaliurrx Re6-1 Sen'ices P y-11;Bener" CITY OF LANSING, MICHIGAN GFOA Certificate of Achievement G Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Lansing Michigan For its Comprehensive Annual Financial Report for the Fiscal Year Ended ,June 30,2013 Executive Director/CFO 9 This page intentionally left blank. 10 FINANCIAL SECTION 11 This page intentionally left blank. 12 �a Fie h m a n n Rebmann Robson 2330 East Paris Ave.SE Grand Rapids,MI 49546 Ph: 616.975.4100 Fx: 616.975.4400 rehmann.com INDEPENDENT AUDITORS' REPORT December 19, 2014 Honorable Mayor and Members of the City Council City of Lansing, Michigan Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business- type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing, Michigan (the "City"), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Independent Auditors'Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 13 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing, Michigan, as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Implementation of GASR Statements No. 65 and 67 As disclosed in Note 19 to the financial statements, the City implemented the provisions of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities (GASB 65), in the current year. Implementation of GASB 65 revised classification of certain financial statement elements and eliminated the presentation of bond issuance costs as an asset. As a result of this change, beginning net position of governmental activities, business-type activities and discretely presented component units decreased by $160,441, $924,785 and $143,468, respectively. In addition, the City implemented the provisions of GASB Statement No. 67, Financial Reporting for Pension Plans in the current year. While there was no effect on the amounts reported in the financial statements themselves, there were substantial changes to the disclosures found in Note 16 to the financial statements, including the calculation of the City's net pension liability, which will be required to be recorded by the City in its next fiscal year. Our opinion is not modified with respect to these matters. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the schedules for the pension and other postemployment benefit plans, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. 14 The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued, under separate cover, our report dated December 19, 2014, on our consideration of the City of Lansing, Michigan's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. ,, .. L Lc 15 This page intentionally left blank. 16 MANAGEMENT'S DISCUSSION AND ANALYSIS 17 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The management of the City of Lansing, Michigan ("the City") provides this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2014 for the benefit of the readers of these financial statements. This management's discussion and analysis ("MD&A") is intended to assist the reader in focusing on significant financial issues and provide an overview of the City's financial activity. The City encourages the readers to consider the following information here in conjunction with the financial statements taken as a whole, which follow this section. Financial Highlights Total government-wide assets and deferred outflows of resources of the City exceeded its liabilities at the close of the fiscal year by $378.9 million (reported as net position), a decrease of $4.3 million from fiscal year 2012/2013. As of the close of the 2013/2014 fiscal year, the City's governmental funds reported combined ending fund balances of $22.8 million, a $3.6 million increase from fiscal year 2012/2013. Of the $22.8 million fiscal year 2013/2014 combined ending fund balance, $9.6 million is legally restricted and/or unavailable to spend (i.e. amounts tied up in inventories), and $6.7 million is committed for designated projects, leaving $6.5 million unassigned. At the end of the fiscal year, unassigned fund balance for the General Fund, (including the amount internally identified as a Budget Stabilization Fund), was $7.1 million, an increase of $1.4 million from FY 2012/13. Please see the "General Fund and Budgetary Highlights" section of this Management Discussion and Analysis for further detail. The business-type activities reported net position at year-end of$261.1 million, an increase of$5.4 million during the year. The City's total bonded and loaned debt was $235.8 million at June 30, 2014, a decrease of $12.1 million (or 4.9%), which represents the net difference between new issuances and payments. More detailed information regarding these activities and funds can be found in footnote 9, Long-Term Debt of the Notes to the Financial Statements section of the CAFR. Overview of the Financial Statements This MDEtA is an introduction to the City's basic financial statements, which comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-Wide Financial Statements. These statements include all non-fiduciary assets and liabilities but exclude assets and liabilities related to pensions. The Statement of Net Position and the Statement of Activities are two financial statements that report information about the City, as a whole, and about its activities, which provide measurements of long term trends that should help answer this question: Is the City, as a whole, better off or worse off as a result of this year's activities? Unlike the governmental funds, the current year's revenues and expenses are taken into account regardless of when cash is received or paid, known as "full accrual accounting". The Statement of Net Position presents all of the City's assets, deferred outflows of resources, liabilities and deferred inflows of resources with the difference between the these categories reported as "net position". Over time, increases and decreases in net position are an indicator of whether the City's long term financial position is improving or deteriorating. The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying events giving rise to the change occur, regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). 18 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The Statement of Net Position and the Statement of Activities report three activities, as follows: Governmental Activities. Most of the City's basic services are reported under this category. Property taxes, income taxes, and intergovernmental revenues generally fund these services. The Council (legislative branch), the District Court (judicial branch), and general operations of the executive branch departments, such as police, fire, parks, public works, and staff departments fall within the governmental activities. Business-type Activities. The City charges fees to customers to help cover all or most of the costs of certain services it provides. Sewage collection and treatment and commercial area parking are examples of business-type activities. Discretely Presented Component Units. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The City has four such discretely presented units; the Lansing Entertainment and Public Facilities Authority, the Tax Increment Finance Authority, the Brownfield Redevelopment Authority, and the SmartZone. These financial statements include two schedules that reconcile the amounts reported on the governmental fund financial statements (modified accrual accounting) with governmental activities (full accrual accounting) on the appropriate government-wide statements. The following summarizes the impact of transitioning from modified accrual to full accrual accounting: Capital assets used in governmental activities are not reported on governmental fund statements. Certain revenues that are earned, but not available for use within the reporting period, are reported as revenues for governmental activities, but are reported as deferred inflows of resources on the governmental fund statements. Other long-term assets that are not available to pay for current period expenditures are deferred in governmental fund statements, but not deferred on the government-wide statements. Internal service funds are reported as governmental activities, but reported as proprietary funds in the fund financial statements. Bond discounts and premiums in the issuance of long term debt, are reported as expenditures in governmental fund statements, but are capitalized and amortized in the government-wide statements. Unless due and payable, long-term liabilities, such as capital lease obligations, compensated absences, litigation, and others only appear as liabilities in the government-wide statements. Capital outlay spending in excess of capitalization thresholds are recorded as capital assets on the government- wide statements, but are reported as expenditures on the governmental fund statements. Bond and note proceeds result in liabilities on the government-wide statements, but are recorded as other financing sources on the governmental fund statements. Certain other outflows, such as debt service principal payments, represent decreases in liabilities on the government-wide statements, but are reported as expenditures on the governmental fund statements. The Notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. 19 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Fund Financial Statements. The City's Major Funds are identified as its General Fund, Sewage Disposal Fund, and it's Municipal Parking System Fund. Data for all other funds, termed "nonmajor funds", are combined into a single, aggregated presentation. A fund is a fiscal and accounting entity with a self-balancing set of accounts that the City uses to keep track of specific sources of funding and spending for a particular purpose. Governmental funds. Most of the City's basic services are reported in the governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for future spending. The governmental fund financial statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are greater or fewer financial resources that can be spent in the near future to finance the City's programs. These funds are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. Governmental funds include the General Fund and special revenue, capital project, debt service, and permanent funds. Proprietary funds. When the City charges customers for the services it provides, whether to outside customers or to other agencies within the City, these services are generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting; the same method used by private sector businesses. Enterprise funds report activities that provide supplies and services to the general public. Examples are the Sewage Disposal Fund and the Municipal Parking Fund. Internal service funds are reported as governmental activities on the government-wide statements. Fiduciary Funds. The City acts as a trustee or fiduciary, for its employee pension plans. It is also responsible for other assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The City's fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position. These funds, which include pension and other employee benefit funds, are reported using full accrual accounting. The government-wide statements exclude fiduciary fund activities and balances because these assets are restricted in purpose and do not represent spendable assets of the City to finance its operations. Additional Required Supplementary Information Following the basic financial statements is additional Required Supplementary Information that further explains and supports the information in the financial statements. The Required Supplementary Information includes required pension and other postemployment benefit supplementary information. Other Supplementary Information Other supplementary information includes combining financial statements for nonmajor governmental, proprietary, and fiduciary funds. These funds are added together, by fund type, and presented in single columns in the basic financial statements, but are not reported individually, as with major funds, on the governmental fund financial statements. 20 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Government-Wide Financial Analysis The City's combined net position decreased $4.3 million over the course of this fiscal year's operations to a total of $378.9 million. Net position of governmental activities decreased $9.7 million or 7.6%, and business-type activities increased $5.4 million or 2.1%. Explanations for those changes are described below under the Governmental Activities and Business-Type Activities sections of this Management Discussion and Analysis. Net Position Governmental Activities Business-type Activities Total 2014 2013 2014 2013 2014 2013 Current and other assets $ 47,595,049 $ 45,743,473 $ 71,988,749 $ 67,785,783 $119,583,798 $113,529,256 Capital assets, net 187,934,084 192,940,938 389,610,713 397,911,962 577,544,797 590,852,900 Total assets 235,529,133 238,684,411 461,599,462 465,697,745 697,128,595 704,382,156 Deferred outflows of resources 201,592 235,534 3,163,496 2,407,670 3,365,088 2,643,204 Long-term liabilities 53,568,260 56,330,630 201,061,383 210,324,829 254,629,643 266,655,459 Other liabilities 64,397,873 55,132,372 2,605,585 2,077,593 67,003,458 57,209,965 Total liabilities 117,966,133 111,463,002 203,666,968 212,402,422 321,633,101 323,865,424 Net position Net investment in capital assets 150,976,010 154,372,604 214,458,841 212,682,278 365,434,851 367,054,882 Restricted 13,133,137 12,552,011 8,746,096 11,077,134 21,879,233 23,629,145 Unrestricted (46,344,555) (39,467,672) 37,891,053 31,943,581 (8,453,502) (7,524,091) Total net position $117,764,592 $127,456,943 $261,095,990 $255,702,993 $378,860,582 $383,159,936 The largest component (96.5%) of the City's net position reflects its net investment in capital assets (e.g. land, buildings, equipment, infrastructure, and others). Restricted net position is the next largest component, which represents amounts subject to external restrictions such as bond covenants, City Charter, State legislation or Constitutional provision. The remaining portion, unrestricted net position are resources that may be used at the City's discretion, but often have limitations based on policy action. 21 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The following condensed financial information was derived from the government-wide Statement of Activities and reflects how the City's net position changed during the fiscal year: Change in Net Position Governmental Activities Business-type Activities Total 2014 2013 2014 2013 2014 2013 Program revenues Charges for services $ 11,939,026 $ 12,530,371 $ 45,042,043 $ 41,346,995 $ 56,981,069 $ 53,877,366 Operating grants 28,234,803 29,322,435 2,574,949 1,193,571 30,809,752 30,516,006 Capital grants 3,365,682 3,124,288 - - 3,365,682 3,124,288 General revenues Taxes 69,530,461 68,519,592 69,530,461 68,519,592 State shared revenues 13,630,527 13,201,648 13,630,527 13,201,648 Unrestricted grants and contributions 22,047,383 18,224,070 22,047,383 18,224,070 Unrestricted investment earnings 36,836 58,588 246,616 356,467 283,452 415,055 Gain (loss)on sale of capital assets - - 2,600 - 2,600 - Total revenues 148,784,718 144,980,992 47,866,208 42,897,033 196,650,926 187,878,025 Expenses General government 24,771,054 27,438,065 - - 24,771,054 27,438,065 Public safety 78,142,897 77,133,469 78,142,897 77,133,469 Public works 37,243,516 29,984,955 37,243,516 29,984,955 Recreation and culture 8,670,918 7,713,098 8,670,918 7,713,098 Community development 7,602,229 16,939,572 7,602,229 16,939,572 Interest on long-term debt 1,340,818 1,475,051 1,340,818 1,475,051 Sewage disposal system - - 28,682,809 26,298,964 28,682,809 26,298,964 Municipal parking system 7,851,702 8,108,373 7,851,702 8,108,373 Cemetery 722,270 633,050 722,270 633,050 Golf 935,671 892,117 935,671 892,117 Garbage and rubbish - 1,557,708 collection 1,722,843 1,557,708 1,722,843 3,650,292 Recycling 3,263,553 3,650,292 3,263,553 3,650,292 Total expenses 157,771,432 160,684,210 43,178,848 41,140,504 200,950,280 201,824,714 Change in net position, before transfers (8,986,714) (15,703,218) 4,687,360 1,756,529 (4,299,354) (13,946,689) Transfers (705,637) (583,117) 705,637 583,117 Change in net position (9,692,351) (16,286,335) 5,392,997 2,339,646 (4,299,354) (13,946,689) Net position: Beginning of year, as restated 127,456,943 143,743,278 255,702,993 253,363,347 383,159,936 397,106,625 End of year $117,764,592 $127,456,943 $261,095,990 $255,702,993 $378,860,582 $383,159,936 22 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Governmental Activities. The following chart depicts revenues of the governmental activities for the fiscal year: Revenues - Governmental Activities Fiscal Year Ending June 30, 2014 Property Tax and Special Assessments Income Tax 25.6% 21.1 Gain on Sale of Capital Assets ---_ 0.0% Unrestricted Investment 1 Earnings Charges for Services 0.0% 8.0% Unrestricted Grants and Contributions Operating Grants and 14.8% Contributions(restricted) Capital Grants and 19.0% State Shared Revenue Contributions 9.2% 2.3% In total, Governmental Activity revenue increased $3.8 million from FY 2012/2013 to FY 2013/2014, with trends of the major revenue categories as follows: Property taxes and special assessments comprised the largest portion of Governmental Activity revenue at 25.6%, or $38.1 million, a $589,289, 1.5% decrease from fiscal year 2012/2013. The decrease was due to reductions in taxable values attributable to the recession and housing market. Income taxes comprised 21.1%, or $31.5 million, of Governmental Activity revenue, the full amount of which is revenue to the General Fund. This represents a $1.6 million, 5.4%, increase from fiscal year 2012/2013. Local income tax rates are prescribed by State law, and limited in Lansing's case to 1% of resident income and 0.5% of the income of persons working in the City, but living outside of its corporate boundaries. Restricted Operating and Capital Grants and Contributions made up $31.6 million, or 21.2% of Governmental Activity revenue for fiscal year 2013/2014, a $846,144 or 2.7% decrease from fiscal year 2012/2013. In this category, $14.2 million are recurring revenues from: State Gas Et Weight tax revenues restricted for streets; Community Development, HOME, and Emergency Shelter entitlement grants; and drug forfeiture funds restricted for drug enforcement efforts. The remaining $17.4 million is attributable to non-entitlement grants. The decrease from FY 2012/2013 is the result of a reduction in non-entitlement grants with the conclusion of much of the federal ARRA grants. Unrestricted Grants and Contributions account comprised 24.0%, or$35.7 million, of revenues, a $4.3 million or 11.9% increase from fiscal year 2012/2013. A little more than one-third of this category, $13.6 million, is attributed to State revenue sharing, an amount distributed to municipalities by the State of Michigan by formula allocation of portions of the State sales tax. Equity payments from the independently-managed-and-operated Board of Water and Light account for $20.6 million of the category, with remaining $1.5 million coming from payments from the State of Michigan for a payment in lieu of tax for its fire protection for its properties, bad driver revenues, and reimbursement of liquor license enforcement costs. A $4.5 million increase in the equity payment from the Board of Water and Light accounted for the increase in unrestricted grants and contributions from FY 2012/2013 to FY 2013/2014. Charges for Services are program-specific revenues generated for services provided. Governmental activity charges for services decreased $591,345 from FY 2012/2013 to FY 2013/2014. The majority of the decrease is attributable to reimbursements received in FY 2012/2013 for road work due to work on underlying utilities. 23 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The following chart depicts expenses of the governmental activities for the fiscal year: Expenses - Governmental Activities Fiscal Year Ending June 30, 2014 Community Interest on Long-term Development Debt 4.8% 0.8% General Government Recreation and Culture (administrative) 5.5% 15.7% Public Works — Public Safety 23.6% 49.5% Total expenses for Governmental Activities decreased $2.9 million from FY 2012/2013 to FY 2013/2014. The reduction is largely attributable to a reduction in non-entitlement grants and corresponding grant expenditures, which decreased $9.0 million from fiscal year 2012/2013. That $9.0 million decrease was offset by a $7.3 million increase from FY 2012/2013 as a result of increased infrastructure and capital expenditures, and a $1.2 million reduction in various other governmental activity expenditures. Departmental reorganizations accounted for differences in expenses from FY 2013/2013 to FY 2013/2014, with departmental divisions being moved from Community development to Public Safety, and Information Technology with the General Government category being moved to an internal service fund (therefore, funded by various funds). Business-type Activities. Net position of the business-type activities increased by $5.4 million during the fiscal year to $261.1 million. The increase was mainly attributable to a $2.2 million increase in parking service from a loan release and a $3.0 increase in sewer system operations during the fiscal year which are necessary to fund the debt associated with the Combined Sewer Overflow (CSO) program in future years. Financial Analysis of the City's Funds As the City completed the fiscal year, its governmental funds reported combined ending fund balances of $22.8 million. Of this, $9.6 million is legally restricted and/or unavailable to spend (i.e. amounts tied up in inventories), and $6.7 million is committed for designated projects, leaving $6.5 million unassigned. 24 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis General Fund Budgetary Highlights The FY 2013/2014 budget was adopted as a balanced budget, based on projected revenues, without any use of reserves. The City budgeted a vacancy factor in its General Fund to account for anticipated positions that would become vacant during the course of the year. Because vacancies that will occur within each department can not be projected, the vacancy factor is budgeted as a single line item of the General Fund and allocated to various departments through a budget amendment during the year. During the course of the fiscal year, the budget was amended to allocate the vacancy factor, and to recognize projected increases in revenues, as well as additional expenditures required as the result of a severe winter, including a major ice storm that required debris collection across the City. General Fund reserves, combined with the Budget Stabilization Fund (combined for financial statement purposes) increased $0.5 million from FY 2012/2013 from $8.7 million to $9.2 million. However, $906,216 of expenditures were from restricted (committed) reserves. As a result, unassigned fund balance increased $1.4 million, or 25.2% from fiscal year 2012/2013. This $1.4 million increase was attributable to General Fund expenditures and operating transfers ending the year less than budgeted, due largely to position vacancies. The FY 2014/2015 budget, adopted at levels commensurate with projected decreases in property values and other revenue levels experienced in FY 2013/2014, is budgeted to increase unassigned reserves by $500,000. Sewage Disposal Fund Net position increased $3.0 million to $237.9 million in FY 2014. Unrestricted net position increased $3.1 million, from $23.4 million to $26.5 million. These increases were attributable to increases in sewer rates during the fiscal year which are necessary to fund the debt associated with the Combined Sewer Overflow (CSO) program in future years. Municipal Parking Fund The Municipal Parking Fund net position increased $2.2 million, from $17.1 million to $19.3 million. Unrestricted net position increased $2.6 million, from $7.4 million to $10.0 million. The increase was largely due to a $1.7 million loan release. 25 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Capital Assets. At the end of the fiscal year 2014, the City had invested $577.5 million, net of accumulated depreciation, in a broad range of capital assets (see the table below). Additional information regarding the City's capital assets can be found in Footnote 6 of the of the Notes to the Financial Statements section of the CAFR. Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Total 2014 2013 2014 2013 2014 2013 Land $ 25,725,672 $ 25,690,735 $ 13,483,909 $ 13,483,909 $ 39,209,581 $ 39,174,644 Land improvements 9,140,079 8,565,261 11,907,987 12,179,183 21,048,066 20,744,444 Buildings and improvements 53,049,485 51,236,128 101,100,442 105,232,796 154,149,927 156,468,924 Equipment 5,708,965 5,460,316 1,955,425 286,281 7,664,390 5,746,597 Infrastructure 92,028,470 96,698,897 253,517,073 258,219,955 345,545,543 354,918,852 Construction in progress 2,281,413 5,289,601 7,645,877 8,509,838 9,927,290 13,799,439 Total capital assets, net $187,934,084 $192,940,938 $389,610,713 $397,911,962 $577,544,797 $590,852,900 Debt Administration. The City, along with the Lansing Building Authority (LBA), a blended component unit of the City, is empowered by law to authorize, issue, and sell debt obligations. Limited tax and unlimited tax general obligation bonds are backed by the full faith and credit of the City. The City also issues revenue-dedicated bonded debt, whose payment for principal and interest comes solely out of funds that receive legally-restricted revenues. The Sewage Disposal fund has the City's only dedicated revenue bonds currently outstanding. LBA's bonds financed the construction of parking, golf course, and firing range improvements. Revenues derived from user fees from persons using parking and golf facilities fund the debt service requirements for related improvements, but they are also backed by a limited tax pledge. 26 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Outstanding Debt 2014 2013 Governmental activities General obligation bonds $ 27,145,000 $ 29,932,000 Installment purchase contracts 3,100,563 2,807,838 Loans 7,062,234 6,246,743 Compensated absences 10,153,254 10,138,900 Workers compensation 5,967,593 6,986,062 Tax settlement 104,322 156,483 Deferred amounts: For issuance discounts (86,654) (93,487) For issuance premiums 121,948 156,091 Total governmental activities 53,568,260 56,330,630 Business-type activities General obligation bonds 175,033,286 182,127,578 Revenue bonds 21,765,000 25,030,000 Installment purchase agreements 1,668,081 - Loans - 1,702,664 Compensated absences 866,003 733,908 Deferred amounts: For issuance discounts (782,377) (2,020,876) For issuance premiums 2,511,390 2,751,555 Total business-type activities 201,061,383 210,324,829 Total outstanding debt $254,629,643 $266,655,459 The City procured a $986,300 loan from the State of Michigan for street and bridge repairs and entered into a $1.5 million installment purchase agreement for trucks, both of which are categorized as Governmental activity debt. The City also issued $3.4 million in State revolving loan fund debt for the City's Wet Weather (formerly Combined Sewer Overflow/Sanitary Sewer Overflow) environmental program in the sewer (proprietary) fund, as well as a $1.7 million installment purchase contract for recycling carts, both of which are considered Business-type activity debt. Under special legislation from the State of Michigan, a restructuring of bonds associated with the parking system and tax increment financing district occurred, resulting in a net increase of $2.2 million in general obligation Business-type activity debt. During the year, a $1.7 million loan was released, which was also categorized as Business-type activity debt. Reductions in the other categories listed above are due debt payments made during the course of the fiscal year. More detailed information regarding these activities and funds can be found in Footnote 9 of the of the Notes to the Financial Statements section of the CAFR. Economic Condition and Outlook Emerging from the Great Recession, Lansing's property values, upon which General Fund property taxes are based, have stabilized, and income taxes have strengthened. Indeed, the 2013/2014 fiscal year resulted in a $1.4 million addition to General Fund unassigned reserves. Lansing's financial picture as a whole has stabilized, but significant challenges remain. Revenue shortfalls during the recession resulted in significant drawdown on its General Fund reserves. While the fiscal year 2013/2014 results improved reserve levels, Lansing's reserve levels are still low. Going forward, State limitations on property tax growth will continue to constrain resources, and pension, healthcare, and infrastructure funding needs continue to significant budgetary challenges. 27 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The City continues strategies implemented by Mayor Virg Bernero during the Recession to address these challenges: maximizing revenues; reducing expenses; improving operational and technological efficiencies; consolidating like functions; pursuing regional collaboration and partnerships for services; working with the City's workforce and labor unions to contain the rising cost of healthcare, pension, and other compensation costs, both now and into the future; and continuing work with the Financial Health Team appointed by the Mayor in 2012 to identify both short-term and long-term strategies to strengthen Lansing, as well as the metropolitan Lansing region. Strengthening the City's economic base and building back up General Fund reserves to pre-Recession levels are top priorities. Accordingly, in addition to fiscal year 2013/2014 results, the City has implemented a new General Fund balance policy in order to build back reserves starting with fiscal year 2014/2015 budget, and conservative revenue projections are anticipated to further the addition to reserves by the end of the fiscal year. In terms of economic development, even during the Recession, which included a historic credit crisis in the private sector, the City has seen significant economic development announcements (see Economic Condition and Outlook in the Transmittal Letter) that have received national recognition; those efforts have had continued success. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. Copies of this financial report, as well as other financial reports, are available on the City's website, www.lansingmi.gov. If you have any questions about this report or need additional financial information, please feel free to contact the Finance Department at (517)483-4500. 28 BASIC FINANCIAL STATEMENTS 29 This page intentionally left blank. 30 GOVERNMENT-WIDE FINANCIAL STATEMENTS 31 CITY OF LANSING, MICHIGAN Statement of Net Position June 30, 2014 Primary Government Governmental Business-type Component Activities Activities Totals Units Assets Cash and investments $ 23,744,085 $ 18,032,987 $ 41,777,072 $ 2,303,169 Receivables, net 37,530,324 28,256,345 65,786,669 963,394 Internal balances (15,615,251) 15,615,251 - - Due from primary government - - - 2,206,788 Inventories, prepaids and other assets 1,935,891 434,187 2,370,078 129,681 Restricted assets: Cash and investments - 9,649,979 9,649,979 1,736,241 Capital assets not being depreciated 28,007,085 21,129,786 49,136,871 - Capital assets being depreciated, net 159,926,999 368,480,927 528,407,926 14,398 Total assets 235,529,133 461,599,462 697,128,595 7,353,671 Deferred outflows of resources Deferred refunding loss 201,592 3,163,496 3,365,088 4,588,603 Liabilities Accounts payable and accrued liabilities 14,638,908 1,429,057 16,067,965 1,510,906 Accrued interest payable 179,819 1,068,981 1,248,800 15,607,525 Unearned revenue 562,468 107,547 670,015 493,788 Due to component units 2,206,788 - 2,206,788 - Long-term liabilities: Due within one year 5,751,001 14,326,328 20,077,329 241,079 Due in more than one year 47,817,259 186,735,055 234,552,314 29,369,737 Net pension obligation 246,093 - 246,093 - Net other postemployment benefit obligation 46,563,797 - 46,563,797 - Total liabilities 117,966,133 203,666,968 321,633,101 47,223,035 Net position Net investment in capital assets 150,976,010 214,458,841 365,434,851 14,398 Restricted for: Public safety 1,084,370 - 1,084,370 - Public works 6,727,918 6,727,918 Community development 3,380,209 3,380,209 Federal and state programs 185,191 185,191 Donations 36,854 - 36,854 Debt service - 8,029,091 8,029,091 Capital projects - 717,005 717,005 Endowments (nonexpendable) 1,718,595 - 1,718,595 Unrestricted (deficit) (46,344,555) 37,891,053 (8,453,502) (35,295,159) Total net position (deficit) $ 117,764,592 $ 261,095,990 $ 378,860,582 $ (35,280,761) The accompanying notes are an integral part of the financial statements. 32 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2014 Program Revenues Operating Capital Net Charges Grants and Grants and (Expense) Functions/Programs Expenses for Services Contributions Contributions Revenues Primary government Governmental activities: General government $ 24,771,054 $ 6,820,261 $ 2,382,985 $ $ (15,567,808) Public safety 78,142,897 2,122,023 8,915,990 (67,104,884) Public works 37,243,516 2,129,126 9,257,293 3,365,682 (22,491,415) Recreation and culture 8,670,918 800,293 55,600 - (7,815,025) Community development 71602,229 67,323 7,622,935 88,029 Interest on long-term debt 1,340,818 - - - (1,340,818) Total governmental activities 157,771,432 11,939,026 28,234,803 3,365,682 (114,231,921) Business-type activities: Sewage disposal system 28,682,809 31,759,698 - - 37076,889 Municipal parking system 7,851,702 7,453,476 27574,949 27176,723 Cemetery 722,270 289,565 - (432,705) Golf 935,671 366,567 (569,104) Garbage and rubbish collection 1,722,843 1,664,201 (58,642) Recycling 3,263,553 3,508,536 - 244,983 Total business-type activities 43,178,848 45,042,043 27574,949 - 47438,144 Total primary government $ 200,950,280 $ 56,981,069 $ 30,809,752 $ 3,365,682 $ (109,793,777) Component units Brownfield redevelopment $ 1,732,268 $ - $ 787,323 $ - $ (944,945) Community development 3,765,599 - - (37765,599) Recreation and culture 6,915,176 5,599,274 17208,780 (107,122) Total component units $ 12,413,043 $ 5,599,274 $ 1,996,103 $ $ (4,817,666) continued... 33 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2014 Primary Government Governmental Business-type Component Activities Activities Totals Units Changes in net position Net (expense) revenues $(114,231,921) $ 4,438,144 $(109,793,777) $ (4,817,666) General revenues: Property taxes 38,079,548 - 38,079,548 3,994,832 Income taxes 31,450,913 31,450,913 - Grants and contributions not restricted to specific programs 35,677,910 35,677,910 - Unrestricted investment earnings 36,836 246,616 283,452 6,398 Gain on sale of capital assets - 2,600 2,600 - Transfers - internal activities (705,637) 705,637 - - Total general revenues and transfers 104,539,570 954,853 105,494,423 4,001,230 Change in net position (9,692,351) 5,392,997 (4,299,354) (816,436) Net position (deficit), beginning of year, as restated 127,456,943 255,702,993 383,159,936 (34,464,325) Net position (deficit), end of year $ 117,764,592 $ 261,095,990 $ 378,860,582 $ (35,280,761) concluded The accompanying notes are an integral part of the financial statements. 34 FUND FINANCIAL STATEMENTS 35 This page intentionally left blank. 36 CITY OF LANSING, MICHIGAN Governmental Fund Financial Statements Major Funds The General Fund is the general operating fund of the City. It is used to account for and report all financial resources not accounted for and reported in another fund. Nonmajor Funds Nonmajor governmental funds are presented, by fund type, beginning on the pages listed below: Special revenue funds, page 130. Debt service funds, page 142. Capital projects funds, page 146. Permanent funds, page 152. 37 CITY OF LANSING, MICHIGAN Balance Sheet Governmental Funds June 30, 2014 Nonmajor Governmental General Funds Totals Assets Cash and cash equivalents $ 318,312 $ 57,262 $ 375,574 Equity in pooled cash and investments 9,347,393 9,787,948 19,135,341 Accounts receivable, net 21,315,215 154,877 21,470,092 Taxes receivable 628,201 - 628,201 Special assessments receivable - 500,778 500,778 Loans receivable 1,432,342 1,432,342 Accrued interest receivable - 2,147,867 2,147,867 Due from other funds 6,390,868 4,055,000 10,445,868 Due from other governments 4,910,767 6,015,078 10,925,845 Inventories 49,601 833,380 882,981 Prepaids 30,169 - 30,169 Total assets $ 42,990,526 $ 24,984,532 $ 67,975,058 Liabilities Accounts payable $ 3,421,929 $ 2,712,490 $ 6,134,419 Deposits payable - 47,028 47,028 Accrued payroll 1,935,015 32,981 1,967,996 Retainage payable 200,089 - 200,089 Due to other funds 20,613,895 3,780,000 24,393,895 Due to component units 2,206,788 - 2,206,788 Advance from other funds - 362,224 362,224 Due to other governments 2,916,501 333,749 3,250,250 Unearned revenue 227,071 335,397 562,468 Other 608,454 - 608,454 Total liabilities 32,129,742 7,603,869 39,733,611 Deferred inflows of resources Unavailable revenue-fees 1,652,722 - 1,652,722 Unavailable revenue- loans and accrued interest receivable - 3,380,209 3,380,209 Unavailable revenue-special assessments - 444,596 444,596 Total deferred inflows of resources 1,652,722 3,824,805 5,477,527 Fund balances Nonspendable 79,770 2,551,975 2,631,745 Restricted 36,854 6,902,928 6,939,782 Committed 2,038,608 4,623,112 6,661,720 Unassigned (deficit) 7,052,830 (522,157) 6,530,673 Total fund balances 9,208,062 13,555,858 22,763,920 Total liabilities, deferred inflows of resources and fund balances $ 42,990,526 $ 24,984,532 $ 67,975,058 The accompanying notes are an integral part of the financial statements. 38 CITY OF LANSING, MICHIGAN Reconciliation Fund Balances of Governmental Funds to Net Position of Governmental Activities June 30, 2014 Fund balances-total governmental funds $ 22,763,920 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Capital assets not being depreciated 28,007,085 Capital assets being depreciated, net 159,926,999 Capital assets accounted for in internal service funds, net (13,326,936) Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current expenditures. Those assets (i.e., receivables) are offset by deferred inflows of resources in the governmental funds and, therefore, are not included in fund balance. Deferred ambulance fees receivable 1,006,779 Deferred nuisance fees receivable 583,808 Deferred loans receivable 1,232,342 Deferred long-term interest receivable 2,147,867 Deferred long-term special assessments receivable 444,596 Deferred long-term taxes and tax settlement receivables 62,135 Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 8,200,789 Long-term liabilities and related deferred outflows are not due and payable in the current period and therefore are not reported in the funds. Bonds, loans and leases payable (31,127,222) Deferred loss on refunding 194,713 Accrued interest on bonds, loans and leases payable (134,197) Net pension obligation (246,093) Net other postemployment benefit obligation (46,563,797) Compensated absences and other long-term liabilities (15,408,196) Net position of governmental activities $ 117,764,592 The accompanying notes are an integral part of the financial statements. 39 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2014 Nonmajor Governmental General Funds Totals Revenues Taxes and special assessments $ 37,146,069 $ 1,005,093 $ 38,151,162 Income taxes 31,450,913 - 31,450,913 Licenses and permits 1,508,133 - 1,508,133 Intergovernmental 15,036,232 26,622,203 41,658,435 Charges for services 8,348,581 4,688,433 13,037,014 Fines and forfeits 2,315,597 422,795 2,738,392 Interest and rents 49,134 7,416 56,550 Contributions 20,715,882 10,000 20,725,882 Otherrevenues 196,380 457,126 653,506 Total revenues 116,766,921 33,213,066 149,979,987 Expenditures Current expenditures: General government 18,149,864 2,913,725 21,063,589 Public safety 66,701,402 5,366,896 72,068,298 Public works 10,095,380 3,361,393 13,456,773 Highways and streets - 10,496,880 10,496,880 Recreation and culture 7,741,209 716,235 8,457,444 Community development 3,646,035 3,646,035 Other functions 2,620,316 - 2,620,316 Debt service: Principal 1,462,295 2,022,809 3,485,104 Interest 438,455 746,802 1,185,257 Capital outlay - 8,715,193 8,715,193 Total expenditures 107,208,921 37,985,968 145,194,889 Revenues over(under)expenditures 9,558,000 (4,772,902) 4,785,098 Other financing sources (uses) Transfers in 385,000 10,137,162 10,522,162 Transfers out (9,503,151) (3,344,648) (12,847,799) Proceeds on sale of capital assets 73,139 94,598 167,737 Issuance of long-term debt - 986,300 986,300 Total other financing sources (uses) (9,045,012) 7,873,412 (1,171,600) Net change in fund balances 512,988 3,100,510 3,613,498 Fund balances, beginning of year 8,695,074 10,455,348 19,150,422 Fund balances, end of year $ 9,208,062 $ 13,555,858 $ 22,763,920 The accompanying notes are an integral part of the financial statements. 40 CITY OF LANSING, MICHIGAN Reconciliation Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities For the Year Ended June 30, 2014 Net change in fund balances-total governmental funds $ 3,613,498 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Capital assets purchased/constructed 7,007,813 Depreciation expense (13,736,351) Loss on sale of capital assets (1,235,003) Proceeds on sale of capital assets (167,737) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds, but rather are deferred to subsequent fiscal years. Changein deferred ambulance fees receivable (1,153,346) Changein deferred nuisance fees receivable (31,679) Changein deferred loans receivable (1,927) Changein deferred long-term interest receivable 69,250 Changein deferred special assessments receivable (97,774) Changein deferred taxes and tax settlement receivables (26,001) Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The net increase (decrease) in the net position of the internal service funds is reported with governmental activities. Net operating loss from governmental activities in internal service funds (651,257) Loss on sale of capital assets from governmental internal service funds 345,736 Interest expense from governmental internal service funds (186,980) Transfers in from governmental internal service funds 1,620,000 Debt proceeds provide current financial resources to governmental funds in the period issued, but issuing debt increases long-term Liabilities in the statement of net position. Repayment of debt principal is an expenditure in the funds, but the repayment reduces long-term liabilities in the statement of net position. Issuance of long-term debt (986,300) Principal payments on long-term liabilities 3,485,104 Certain expenditures are reported in governmental funds that reduce long-term liabilities for purposes of the statement of net position. Change in estimated liability for workers'compensation 1,018,469 Some expenses reported in the statement of activates do not require the use of current financial resources and therefore are not reported as expenditures in the funds. Change in accrued interest payable on long-term liabilities 32,957 Amortization of issuance premiums and discounts, and deferred refunding losses (1,538) Change in net other postemployment benefit obligation (8,755,530) Change in net pension obligation (2,965) Change in the accrual for compensated absences 97,049 Change in the accrual for tax settlement agreement 52,161 Change in net position of governmental activities $ (9,692,351) The accompanying notes are an integral part of the financial statements. 41 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2014 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Property taxes $ 37,524,500 $ 37,524,500 $ 37,146,069 $ (378,431) Income taxes 29,130,000 30,355,000 31,450,913 1,095,913 Licenses and permits 1,564,700 1,553,100 1,508,133 (44,967) Intergovernmental 14,568,300 14,568,300 15,036,232 467,932 Charges for services 9,001,000 9,402,600 8,348,581 (1,054,019) Fines and forfeits 2,595,400 2,595,400 2,315,597 (279,803) Interest and rents 60,000 60,000 49,134 (10,866) Contributions 20,905,390 20,762,353 20,715,882 (46,471) Otherrevenues - 132,100 196,380 64,280 Total revenues 115,349,290 116,953,353 116,766,921 (186,432) Expenditures General government: Attorney's office 1,450,050 1,466,533 1,417,510 (49,023) City clerk 878,850 932,067 906,432 (25,635) Council 626,040 634,589 613,970 (20,619) Courts 5,596,560 5,646,807 5,473,601 (173,206) Internal audit 184,200 186,694 175,996 (10,698) Finance 4,885,760 4,663,350 4,506,989 (156,361) Library rental 155,000 155,000 154,737 (263) LEPFA support 311,400 1,208,780 1,208,780 - Hu man resources 1,610,340 1,623,843 1,567,489 (56,354) Mayor 748,180 819,940 826,471 6,531 Office of community media 333,740 336,680 336,702 22 Planning / neighborhood development 841,360 854,984 961,187 106,203 Budgetary savings from attrition (600,000) - - - Total general government 17,021,480 18,529,267 18,149,864 (379,403) Public safety: Police 35,359,530 35,484,905 34,995,936 (488,969) Fire 33,181,260 32,741,881 31,705,466 (1,036,415) Total public safety 68,540,790 68,226,786 66,701,402 (1,525,384) Public works 9,437,430 9,801,661 10,095,380 293,719 Recreation and culture 7,042,520 7,135,872 7,741,209 605,337 continued... 42 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2014 Actual Over Original Final (Under) Final Budget Budget Actual Budget Expenditures (concluded) Other functions: Human relations / community services $ 868,090 $ 878,162 $ 926,388 $ 48,226 Human services / community support 1,395,000 1,918,017 1,693,928 (224,089) Total other functions 2,263,090 2,796,179 2,620,316 (175,863) Debt service: Principal 948,220 1,462,620 1,462,295 (325) Interest 444,000 444,000 438,455 (5,545) Total debt service 1,392,220 1,906,620 1,900,750 (5,870) Total expenditures 105,697,530 108,396,385 107,208,921 (1,187,464) Revenues over expenditures 9,651,760 8,556,968 9,558,000 1,001,032 Other financing sources (uses) Transfers in 85,000 385,000 385,000 - Transfers out (9,736,760) (9,439,986) (9,503,151) 63,165 Proceeds on sale of capital assets 8,000 73,139 65,139 Total other financing sources (uses) (9,651,760) (9,046,986) (9,045,012) 1,974 Net change in fund balance - (490,018) 512,988 1,003,006 Fund balance, beginning of year 8,695,074 8,695,074 8,695,074 - Fund balance, end of year $ 8,695,074 $ 8,205,056 $ 9,208,062 $ 1,003,006 concluded The accompanying notes are an integral part of the financial statements. 43 This page intentionally left blank. 44 CITY OF LANSING, MICHIGAN Proprietary Fund Financial Statements Major Funds The Sewage Disposal System Fund accounts for the provision of sewage disposal services to the residents of the City. The Municipal Parking System Fund accounts for the operation of City-owned parking facilities. Nonmajor Funds and Internal Service Funds Nonmajor enterprise funds and internal service funds are presented, by fund type, beginning on the pages listed below: Nonmajor enterprise funds, page 156. Internal service funds, page 162. 45 CITY OF LANSING, MICHIGAN Statement of Net Position Proprietary Funds June 30, 2014 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Assets Current assets: Cash and cash equivalents $ - $ 672,573 $ 500 $ 673,073 $ 1,892,332 Equity in pooled cash and investments 10,513,603 5,024,198 1,822,113 17,359,914 2,972,619 Accounts receivable,net 5,056,709 430,646 55,876 5,543,231 425,199 Accrued interest receivable 52,596 74,268 - 126,864 - Lease receivable,current 612,693 - 612,693 Loans receivable,current - 241,079 - 241,079 - Inventories 346,009 - 88,178 434,187 472,528 Prepaids - - - - 550,213 Due from other funds 18,385,874 3,258,021 - 21,643,895 - Total current assets 34,967,484 9,700,785 1,966,667 46,634,936 6,312,891 Noncurrent assets: Restricted cash and cash equivalents 8,932,974 717,005 - 9,649,979 - Advances to other funds - 362,224 362,224 Lease receivable, net of current portion 9,408,506 11,858,813 21,267,319 Loans receivable, net of current portion - 465,159 465,159 - Capitalassets not being depreciated 8,066,625 12,558,920 504,241 21,129,786 1,715,680 Capital assets being depreciated, net 343,437,782 21,133,294 3,909,851 368,480,927 11,611,256 Total noncurrent assets 369,845,887 47,095,415 4,414,092 421,355,394 13,326,936 Total assets 404,813,371 56,796,200 6,380,759 467,990,330 19,639,827 Deferred outflows of resources Deferred refunding loss 1,389,152 1,767,053 7,291 3,163,496 6,879 Liabilities Current liabilities: Accounts payable 915,507 208,758 148,915 1,273,180 1,507,694 Deposits payable - 57,355 4,140 61,495 - Accrued interest payable 903,883 156,314 8,784 1,068,981 45,622 Accrued payroll 54,026 23,900 16,456 94,382 91,170 Claims incurred but not reported - - - - 831,808 Due to other funds 6,385,597 5,271 6,390,868 1,305,000 Negative equity in pooled cash and investments - - - 631,781 Unearned revenues - - 107,547 107,547 - Bonds and notes payable,current portion 12,234,366 1,745,000 308,649 14,288,015 848,702 Compensated absences,current portion 35,907 2,406 - 38,313 104,136 Total current liabilities 20,529,286 2,193,733 599,762 23,322,781 5,365,913 Noncurrent liabilities: Bonds and notes payable, net of current portion 147,292,667 36,950,266 1,664,432 185,907,365 5,367,167 Compensated absences, net of current portion 464,533 119,620 243,537 827,690 712,837 Total noncurrent liabilities 147,757,200 37,069,886 1,907,969 186,735,055 6,080,004 Total liabilities 168,286,486 39,263,619 2,507,731 210,057,836 11,445,917 Net position Net investment in capital assets 203,387,725 8,622,814 2,448,302 214,458,841 7,117,946 Restricted for debt retirement 8,029,091 - - 8,029,091 - Restricted for capital projects - 717,005 - 717,005 - Unrestricted 26,499,221 9,959,815 1,432,017 37,891,053 1,082,843 Total net position $ 237,916,037 $ 19,299,634 $ 3,880,319 $ 261,095,990 $ 8,200,789 The accompanying notes are an integral part of the financial statements. 46 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2014 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Operating revenues Charges for services $ 31,759,698 $ 7,453,476 $ 5,828,869 $ 45,042,043 $ 75,132,329 Operating expenses Personal services 6,093,500 2,489,630 3,687,771 12,270,901 7,756,339 Purchase of goods and services 7,331,401 1,123,430 2,650,214 11,105,045 66,545,184 Depreciation 10,315,747 2,379,395 257,814 12,952,956 1,482,063 Total operating expenses 23,740,648 5,992,455 6,595,799 36,328,902 75,783,586 Operating income(loss) 8,019,050 1,461,021 (766,930) 8,713,141 (651,257) Nonoperating revenues(expenses) Intergovernmental - 1,702,664 - 1,702,664 Interest revenue 237,096 - 9,520 246,616 - Gain on sale of capital assets - 2,600 - 2,600 345,736 Interest expense and fees (4,169,230) (1,859,247) (48,538) (6,077,015) (186,980) Other revenue(expense) (772,931) 872,285 99,354 Total nonoperating expenses (4,705,065) 718,302 (39,018) (4,025,781) 158,756 Income(loss)before transfers 3,313,985 2,179,323 (805,948) 4,687,360 (492,501) Transfers in - - 1,021,287 1,021,287 1,620,000 Transfers out (300,000) - (15,650) (315,650) - Change in net position 3,013,985 2,179,323 199,689 5,392,997 1,127,499 Net position, beginning of year,as restated 234,902,052 17,120,311 3,680,630 255,702,993 7,073,290 Net position,end of year $ 237,916,037 $ 19,299,634 $ 3,880,319 $ 261,095,990 $ 8,200,789 The accompanying notes are an integral part of the financial statements. 47 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2014 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Cash flows from operating activities Cash received from customers $ 32,721,037 $ 5,277,936 $ 5,858,989 $ 43,857,962 $ - Cash received from interfund services - - - - 76,095,336 Cash payments for goods and services (6,797,386) (1,066,882) (3,195,129) (11,059,397) (66,846,625) Cash payments to employees (6,006,460) (2,445,797) (3,668,415) (12,120,672) (7,600,534) Net cash provided by(used in)operating activities 19,917,191 1,765,257 (1,004,555) 20,677,893 1,648,177 Cash flows from noncapital financing activities Transfers in - - 1,021,287 1,021,287 1,620,000 Transfers out (300,000) - (15,650) (315,650) - Cash received on interfund advances 107,103 - 107,103 - Net cash provided by(used in) noncapital financing activities (300,000) 107,103 1,005,637 812,740 1,620,000 Cash flows from capital and related financing activities Proceeds from sale of capital assets 2,600 - 2,600 345,736 Acquisition and construction of capital assets (2,432,607) (658,465) (1,806,073) (4,897,145) (4,606,487) Cash received for finance charges - 53,174 - 53,174 - Proceeds from issuance of long-term debt 2,582,707 7,245,000 1,737,700 11,565,407 1,550,855 Principal paid on long-term debt (14,199,930) (1,685,000) (169,619) (16,054,549) (730,835) Interest paid on long-term debt (4,303,042) (1,544,843) (38,067) (5,885,952) (173,372) Amount paid to refunding bond escrow agent - (4,973,199) (4,973,199) Payments received on capital lease 763,706 763,706 Net cash used in capital and related financing activities (17,589,166) (1,560,733) (276,059) (19,425,958) (3,614,103) Cash flows from investing activities Interest and dividends received 239,194 - 9,520 248,714 Payments received on loans made to others - 179,993 - 179,993 Net cash provided by(used in) investing activities 239,194 179,993 9,520 428,707 Net change in cash and cash equivalents 2,267,219 491,620 (265,457) 2,493,382 (345,926) Cash and cash equivalents,beginning of year 17,179,358 5,922,156 2,088,070 25,189,584 4,579,096 Cash and cash equivalents,end of year $ 19,446,577 $ 6,413,776 $ 1,822,613 $ 27,682,966 $ 4,233,170 Reconciliation to statement of net position Cash and cash equivalents $ - $ 672,573 $ 500 $ 673,073 $ 1,892,332 Equity in pooled cash and investments 10,513,603 5,024,198 1,822,113 17,359,914 2,972,619 Restricted cash and cash equivalents 8,932,974 717,005 - 9,649,979 - Negative equity in pooled cash and investments - - - - (631,781) $ 19,446,577 $ 6,413,776 $ 1,822,613 $ 27,682,966 $ 4,233,170 continued... 48 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2014 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Reconciliation of operating income(loss)to net cash provided by(used in)operating activities Operating income(loss) $ 8,019,050 $ 1,461,021 $ (766,930) $ 8,713,141 $ (651,257) Adjustments to reconcile operating income(loss)to net cash provided by(used in)operating activities: Depreciation expense 10,315,747 2,379,395 257,814 12,952,956 1,482,063 Net book value of disposed capital costs 245,438 - - 245,438 - Change in operating assets and liabilities that provided(used)cash: Accounts receivable (1,049,035) 38,165 (12,493) (1,023,363) 12,763 Inventories 15,930 - (1,002) 14,928 371,190 Prepaids - 5,923 5,923 (143,598) Due from other funds 2,010,374 (2,231,560) - (221,186) 950,244 Accounts payable 422,321 50,625 26,087 499,033 (334,033) Deposits payable - 17,855 (270) 17,585 - Accrued payroll 10,220 5,849 2,065 18,134 26,608 Claims incurred but not reported - - - - 17,794 Due to other funds (149,674) (570,000) (719,674) (195,000) Unearned revenues - - 42,883 42,883 - Compensated absences 76,820 37,984 17,291 132,095 111,403 Net cash provided by(used in)operating activities $ 19,917,191 $ 1,765,257 $ (1,004,555) $ 20,677,893 $ 1,648,177 concluded Non-cash transactions The sewer disposal system fund other revenue (expense) includes a non-cash addition to long-term debt in the amount of $772,931 for revision in previously granted loan forgiveness applied to the balance of one of the drinking water revolving loans the year ended June 30,2014. The municipal parking system fund received non-cash loan forgiveness of$1,702,664 for the year ended June 30,2014. The accompanying notes are an integral part of the financial statements. 49 This page intentionally left blank. 50 CITY OF LANSING, MICHIGAN Fiduciary Fund Financial Statement Pension and Other Postemployment Benefit Trust Funds - Employee pension and other postemployment benefit trust funds accept payments made by the City, invest fund resources, calculate and pay pensions to retirees (or beneficiaries), and account for postemployment healthcare coverage. Combining schedules for fiduciary funds are presented in the notes to the financial statements. Agency Funds - These funds account for resources held in a trustee or agent capacity for the 54-A District Court. Combining statements for agency funds are presented, by fund type, beginning on page 168. 51 CITY OF LANSING, MICHIGAN Statement of Fiduciary Net Position Fiduciary Funds June 30, 2014 Pension and Other Postemployment Benefits Trust Agency Funds Funds Assets Cash and cash equivalents $ 46,678,018 $ Equity in pooled cash and investments - 91,410 Investments: Money market funds 4,865,668 Government obligations 75,796,958 - Corporate bonds 591530,701 Common stocks 143,348,516 Mutualfunds 23116447520 Contribution receivable 6,731 Dividends and interest receivable 620,563 Total assets 562,491,675 $ 91,410 Liabilities Accounts payable 11,872,990 $ - Undistributed receipts - 91,410 Total liabilities 11,872,990 $ 91,410 Net position restricted for Pension benefits 487,548,911 Other postemployment benefits 63,069,774 Total net position $ 550,618,685 The accompanying notes are an integral part of the financial statements. 52 CITY OF LANSING, MICHIGAN Statement of Changes in Fiduciary Net Position Pension and Other Postemployment Benefit Trust Funds For the Year Ended June 30, 2014 Additions Investment income: Net appreciation in fair value of investments $ 53,642,729 Interest income 4,875,014 Dividend income 1,776,438 Investment expenses (5,660) Net investment income 60,288,521 Contributions: Employer 43,627,667 Plan members 4,206,068 Total contributions 47,833,735 Total additions 108,122,256 Deductions Participant benefits 70,727,799 Administrative expense 1,882,543 Total deductions 72,610,342 Change in net position 35,511,914 Net position restricted for pension and other postemployment benefits Beginning of year 515,106,771 End of year $ 550,618,685 The accompanying notes are an integral part of the financial statements. 53 This page intentionally left blank. 54 COMPONENT UNITS 55 This page intentionally left blank. 56 CITY OF LANSING, MICHIGAN Discretely Presented Component Units Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City has four discretely presented component units: Brownfield Redevelopment Authority Tax Increment Finance Authority Lansing Entertainment and Public Facilities Authority SmartZone Complete financial statements for each of the individual component units, excluding SmartZone, may be obtained from the entity's administrative offices. Separately-issued financial statements are not prepared for the SmartZone. 57 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Discretely Presented Component Units June 30, 2014 Lansing Tax Entertainment Brownfield Increment £t Public Redevelopment Finance Facilities Smart Authority Authority Authority Zone Totals Assets Cash and cash equivalents $ 952,780 $ 1,158,277 $ 192,112 $ $ 2,303,169 Receivables, net 534,195 564 428,635 963,394 Due from primary government 1,059,742 1,144,434 - 2,612 2,206,788 Inventories, prepaids and other assets - - 129,681 - 129,681 Restricted cash and cash equivalents 904,545 831,696 1,736,241 Capital assets being depreciated, net - - 14,398 - 14,398 Total assets 2,546,717 3,207,820 1,596,522 2,612 7,353,671 Deferred outflows of resources Deferred refunding loss - 4,588,603 - - 4,588,603 Liabilities Accounts payable and accrued liabilities 1,235,321 15,561 260,024 1,510,906 Accrued interest payable - 15,458,601 148,924 15,607,525 Unearned revenues - - 493,788 493,788 Long-term debt: Due within one year 241,079 - - 241,079 Due in more than one year 465,159 28,904,578 - 29,369,737 Total liabilities 1,941,559 44,378,740 902,736 47,223,035 Net position Net investment in capital assets - - 14,398 14,398 Unrestricted (deficit) 605,158 (36,582,317) 679,388 2,612 (35,295,159) Total net position (deficit) $ 605,158 $ (36,582,317) $ 693,786 $ 2,612 $ (35,280,761) The accompanying notes are an integral part of the financial statements. 58 This page intentionally left blank. 59 CITY OF LANSING, MICHIGAN Combining Statement of Activities Discretely Presented Component Units For the Year Ended June 30, 2014 Lansing Tax Entertainment Brownfield Increment £t Public Redevelopment Finance Facilities Smart Authority Authority Authority Zone Totals Expenses Brownfield redevelopment $ 1,732,268 $ - $ $ $ 1,732,268 Community development - 3,765,599 3,765,599 Recreation and culture - - 6,915,176 6,915,176 Total expenses 1,732,268 3,765,599 6,915,176 12,413,043 Program revenues Charges for services - - 5,599,274 5,599,274 Operating grants and contributions 787,323 1,208,780 1,996,103 Total program revenues 787,323 6,808,054 7,595,377 Net program revenue (expense) (944,945) (3,765,599) (107,122) (4,817,666) General revenues Property taxes 1,209,741 2,515,321 269,770 3,994,832 Unrestricted investment earnings 1,903 4,438 57 6,398 Total general revenues 1,211,644 2,519,759 269,827 4,001,230 Changes in net position 266,699 (1,245,840) 162,705 - (816,436) Net position (deficit), beginning of year, as restated 338,459 (35,336,477) 531,081 2,612 (34,464,325) Net position (deficit), end of year $ 605,158 $ (36,582,317) $ 693,786 $ 2,612 $ (35,280,761) The accompanying notes are an integral part of the financial statements. 60 NOTES TO FINANCIAL STATEMENTS 61 This page intentionally left blank. 62 CITY OF LANSING, MICHIGAN Index - Notes to Financial Statements Pape 1. Summary of Significant Accounting Policies 64 Reporting entity Government-wide and fund financial statements Measurement focus, basis of accounting, and financial statement presentation Assets, deferred outflows of resources, liabilities, deferred inflows of resources, and equity 2. Budgetary Information 73 3. Deficit Fund Equity 74 4. Deposits and Investments 75 5. Receivables 82 6. Capital Assets 83 7. Accounts Payable and Accrued Liabilities 85 8. Interfund Receivables, Payables and Transfers 85 9. Long-Term Debt 87 10.Fund Balances - Governmental Funds 92 11.Net Investment in Capital Assets 93 12.Segment Information - Enterprise Funds 93 13.Risk Management 93 14.Property Taxes 94 15.Contingent Liabilities 95 16.Pension Plans 95 17.Other Postemployment Benefits 108 18.Operating Lease 112 19.Adoption of New Accounting Pronouncement 113 20.Subsequent Events 113 63 CITY OF LANSING, MICHIGAN Notes to Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lansing (the "City") was incorporated in 1859. In 1909, the City came under the provisions of Act 279, P.A. 1909, as amended ("Home Rule City Act"). The City operates under a strong Mayor form of government in which the Mayor is responsible for implementation and administration of City policy as established by City Council. The accounting and reporting policies of the City conform in all material respects to generally accepted accounting principles (GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the standard setting body for establishing governmental accounting and financial reporting principles, which are primarily set forth in the GASB's Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification). Following is a summary of the significant policies: Reporting Entity As required by generally accepted accounting principles, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The financial data of the component units are included in the City's reporting entity because of the significance of their operational or financial relationships with the City. Blended Component Unit A blended component unit is a legally separate entity from the City but is so intertwined with the City that it is, in substance, the same as the City. It is reported as part of the City and its financial data is combined with data of the appropriate funds. The City has one blended component unit, the Building Authority with a fiscal June 30 year-end. This component unit provides services primarily to benefit the City. The blended unit is described as follows: The Building Authority (the "Authority") was established by the City under Act 31, Michigan Public Acts of 1948. The Mayor, with the advice and consent of City Council, appoints the Authority's governing body and designates management. The Authority uses the proceeds of its tax-exempt bonds to finance the construction or acquisition of capital assets for the City only. The bonds are secured by lease agreements with the City and will be retired through lease payments from the City. The financial activity, assets, liabilities and equity of the Authority are incorporated within the City's Municipal Parking System and Golf enterprise funds, and the 1998 Building Authority Debt Service Fund. Discretely Presented Component Units Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City has four discretely presented component units, the Brownfield Redevelopment Authority, the Tax Increment Financing Authority, the Lansing Entertainment and Public Facilities Authority, and the Smart Zone, each with a fiscal June 30 year- end. The discretely presented component units are as follows: 64 CITY OF LANSING, MICHIGAN Notes to Financial Statements The Lansing Brownfield Redevelopment Authority ("LBRA") was established by the City on August 17, 1997, under the authority contained in Act 381, Michigan Public Acts of 1996 (the "Act"). The Act authorizes the City to establish and to designate the boundaries of a Brownfield redevelopment zone. The Brownfield Redevelopment Authority is appointed by City Council to preside over such a zone, and it is authorized to promote the revitalization of environmentally distressed areas within the City of Lansing. The Act allows the LBRA to participate in a broad range of improvement activities intended to encourage the reuse of industrial and commercial property by offering economic incentives for redevelopment to prevent property value deterioration. Tax increment financing plans must be approved by the City. Tax increment financing permits the LBRA to capture tax revenues which are attributable to increases in the value of real and personal property located within an approved project area. Current activities of the LBRA include collections of property tax revenues on project areas for the Rite Aid Pharmacy and the former Motor Wheel Site Plant. The Tax Increment Finance Authority ("TIFA") was established by the City under the authority contained in Act 450, Michigan Public Acts of 1981 ("Act 450"). Act 450 authorizes the City to designate specific districts within its corporate limits as TIFA districts. The TIFA presides over such districts, formulating plans for public improvements, economic development, neighborhood revitalization, and historic preservation within the districts. Act 450 allows the TIFA to participate in a broad range of improvement activities intended to contribute to economic growth and prevent property value deterioration. The TIFA's governing body is appointed by the Mayor with the advice and consent of the City Council. Bond issuances, to fund the above activities, are approved by the City Council and the legal liability for the debt remains with the City. The Lansing Entertainment and Public Facilities Authority ("LEPFA") was established under the charter of the City of Lansing in February 1996, replacing the former Greater Lansing Convention/Exhibition Authority, which had been responsible for operating and managing the Lansing Center and the Lansing Civic Arena (the latter through the fiscal year ended June 30, 1995). LEPFA was established to oversee the management and operations of the Lansing Center, the City Market and the Cooley Law School stadium. LEPFA is chartered as a building authority under the provisions of Act 31, Public Acts of Michigan, 1948. In the event of dissolution or termination of LEPFA, all assets and rights of the Authority shall revert to the City. LEPFA's Board of Commissioners consists of thirteen members appointed by the Mayor of the City of Lansing and approved by the City Council. The Lansing Regional SmartZone ("SmartZone") was established by the City of Lansing and the City of East Lansing under the authority contained in Act 281, Public Act of Michigan of 1986 ("Act 281"). Act 281 authorizes the Cities to create a multi-jurisdictional local development finance authority. The SmartZone shall be known and exercise its powers under title of the Local Development Finance Authority of the Cities of Lansing and East Lansing. The SmartZone is fiscally dependent on the City of Lansing; the City approves the annual budget and is responsible for managing the SmartZone. The SmartZone was created in order to eliminate the conditions of unemployment, underemployment and joblessness, and to promote economic growth in the City. The SmartZone's Board of Commissioners consists of seven members, three of which are appointed by the City of Lansing, three are appointed by the City of East Lansing, and one is appointed by the Ingham County Board of Commissioners. 65 CITY OF LANSING, MICHIGAN Notes to Financial Statements Component Unit Financial Statements Complete financial statements for the individual component units may be obtained from each entity's administrative offices. Separate financial statements are not prepared for the SmartZone. City of Lansing Building Authority 8th Floor 124 West Michigan Avenue Lansing, Michigan 48933 Brownfield Redevelopment Authority / Tax Increment Finance Authority 1000 S Washington Avenue, Suite 201 Lansing, Michigan 48910 Lansing Entertainment and Public Facilities Authority 333 East Michigan Avenue Lansing, Michigan 48933 Government-Wide and Fund Financial Statements The government wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 66 CITY OF LANSING, MICHIGAN Notes to Financial Statements Measurement Focus Basis of Accounting, and Financial Statement Presentation The government wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Agency funds, a type of fiduciary fund, are unlike all other types of funds, reporting only assets and liabilities. Therefore, agency funds cannot be said to have a measurement focus. They do, however, use the accrual basis of accounting to recognize receivables and payables. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers all revenues reported in the governmental funds to be available if they are collected within three months after year-end, except for income taxes that use a 45-day collection period, property taxes that use a 60-day collection period, and reimbursement-based grants that use one year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, intergovernmental revenue, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and as such have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental fund: General fund. This fund is the City's primary operating fund. It accounts for all the financial resources of the primary government, except those accounted for and reported in another fund. The City reports the following major enterprise funds: Sewage Disposal System Fund. This fund accounts for the provision of sewage disposal services to the residents of the City. Municipal Parking System Fund. This fund accounts for the operation of City-owned parking facilities. Additionally, the City reports the following fund types: Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects that comprise, or are expected to comprise a substantial portion of the fund's total reported inflows. Debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal, interest and related costs. 67 CITY OF LANSING, MICHIGAN Notes to Financial Statements Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Permanent funds account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the government's programs. Enterprise funds account for those operations that are financed and operated in a manner similar to private business or where the City has decided that the determination of revenues earned, costs incurred and/or net income is necessary for management accountability. Internal service funds account for operations that provide services to other departments or agencies of the City, or to other governments, on a cost-reimbursement basis. This includes operating a maintenance facility for trucks and equipment used by the Public Service Department, health care and self-insurance services, and information technology. Pension and other postemployment benefit trust funds account for the accumulation of resources to be used for retirement annuity payments to eligible full-time employees of the City, certain healthcare costs, and other retirement distributions. The agency fund account for resources held in a trustee or agent capacity for the 54-A District Court. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Restricted net position are assets that are subject to restrictions beyond the government's control. The restrictions may be externally imposed or imposed by law. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. 68 CITY OF LANSING, MICHIGAN Notes to Financial Statements Assets, deferred outflows of resources, liabilities, deferred inflows of resources, and equity Deposits and investments The City maintains an investment pool for all City funds. Each fund's portion of the investment pool is displayed on the statement of net position/balance sheet as "equity in pooled cash." The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Restricted cash consists of amounts required to be maintained separately in accordance with bond covenants. State statutes authorize the City to invest in: Bonds, securities, other obligations and repurchase agreements of the United States, or an agency or instrumentality of the United States. Certificates of deposit, savings accounts, deposit accounts or depository receipts of a qualified financial institution. Commercial paper rated at the time of purchase within the two highest classifications established by not less than two standard rating services and that matures not more than 270 days after the date of purchase. Bankers' acceptances of United States banks. Obligations of the State of Michigan and its political subdivisions, that, at the time of purchase are rated as investment grade by at least one standard rating service. Mutual funds registered under the Investment Company Act of 1940 with the authority to purchase only investment vehicles that are legal for direct investment by a public corporation. External investment pools as authorized by Public Act 20 as amended through December 31, 1997. Investments are stated at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Mortgages are valued on the basis of future principal and interest payments, and are discounted at prevailing interest rates for similar instruments. Investments that do not have established market values are reported at estimated fair value. Cash deposits are reported at carrying amounts, which reasonably approximates fair value. Unrealized appreciation or depreciation on pension and other postemployment benefit trust fund investments due to changes in fair value are recognized each year. 69 CITY OF LANSING, MICHIGAN Notes to Financial Statements Receivables and payables All trade and delinquent property tax receivables are shown net of an allowance for uncollectibles, as applicable. Certain receivables in governmental funds consist of rehabilitation and redevelopment loans that are generally not expected or scheduled to be collected in the subsequent year. Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either interfund receivables/payables (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental and business-type activities are reported in the government-wide financial statements as internal balances. Inventories, prepaids and other assets All inventories are valued at cost using the first-in/first-out method. Inventories of governmental funds are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Capital assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items acquired or constructed since June 30, 1980), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets that are used for governmental activities are only reported in the government-wide statements. Infrastructure ("public domain") assets, including roads, bridges, sanitary sewers, drains, curbs, and gutters are capitalized. With this measurement focus, all assets and liabilities (whether current or noncurrent) associated with the operations of these funds are included on the government-wide statement of net position. All land and non-depreciable land improvements are capitalized, regardless of cost. Equipment and vehicles are capitalized when the cost of individual items exceed $5,000. The road and sewer networks are all capitalized regardless of cost. Buildings are capitalized over $100,000, and the recreational facilities' thresholds range from $25,000 to $50,000. 70 CITY OF LANSING, MICHIGAN Notes to Financial Statements Capital assets of the primary government are depreciated using the straight-line method over the following estimated useful lives: Years Buildings 20-50 Improvements 8-50 Equipment 3-15 Sanitary sewers 50 Infrastructure 10-75 Deferred outflows of resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to one or more future periods and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City only has one item that qualifies for reporting in this category, which is the deferred refunding loss. A deferred refunding loss results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. Compensated absences It is the government's policy to permit employees to accumulate earned but unused vacation and compensatory time benefits, subject to certain limitations. Certain bargaining unit employees are also permitted to accumulate earned but unused sick leave. All vacation and compensatory time pay and 50 percent of sick leave are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations or retirements. Long-term obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long term debt and other long term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, are deferred and amortized over the life of the bonds using the straight-line basis. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as expenses when incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 71 CITY OF LANSING, MICHIGAN Notes to Financial Statements Deferred inflows of resources In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to one or more future periods and so will not be recognized as an inflow of resources (revenue) until that time. The governmental funds also report unavailable revenues, which arise only under a modified accrual basis of accounting that are reported as deferred inflows of resources. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Fund balances Governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund balance is reported when externally imposed constraints are placed on the use of resources by grantors, contributors, or laws or regulations of other governments. Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision-making authority, the City Council. A formal resolution of the City Council is required to establish, modify, or rescind a fund balance commitment. The City reports assigned fund balance for amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed. The City currently has no assigned fund balance, as the City Council has not yet given the authority for the making of such assignments. Unassigned fund balance is the residual classification for the general fund. When the City incurs an expenditure for purposes for which various fund balance classifications can be used, it is the government's policy to use restricted fund balance first, then committed fund balance, assigned fund balance, and finally unassigned fund balance. 72 CITY OF LANSING, MICHIGAN Notes to Financial Statements 2. BUDGETARY INFORMATION The City follows these procedures in establishing the budgetary data reflected in the financial statements: On or before the fourth Monday in March, the Mayor submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. A public hearing on the proposed use of funds is held by the Mayor, and a public hearing on the annual appropriations as proposed by the City Council is held no later than one week prior to adoption of the annual appropriation measure. Not later than the third Monday in May, the Council adopts a budget for the ensuing fiscal year, makes an appropriation of the money needed therefore, and sets the property tax rate necessary to support the appropriations measure. The appropriated budget is prepared by fund, department and the mandatory expenditure accounts as established by the State of Michigan's Uniform Chart of Accounts. Within the General Fund, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within each department. Within other funds, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within that fund. Transfers between appropriations (mandatory accounts) require City Council approval. An exception to City Council approval is allowed by City Charter for transfers between appropriations (mandatory accounts) for amounts less than five thousand dollars, but not in excess of 15% of the appropriation in cases where five thousand dollars exceeds 15%of the appropriation. Copies of the City's separately issued budget report may be obtained from the Finance Department, 124 West Michigan Avenue, Lansing, Michigan 48933. The City formally adopts operating budgets for the general fund and all special revenue funds. Budgetary integration is employed as a management control device during the year for all budgeted funds. Except for the general fund, these budgets are adopted on a basis consistent with generally accepted accounting principles ("GAAP"). In the general fund, capital lease payments / installment payments are budgeted, but capital lease acquisitions are not. There were no capital lease acquisitions during the year ended June 30, 2014. Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. 73 CITY OF LANSING, MICHIGAN Notes to Financial Statements P.A. 621 of 1978, as amended, provides that a local unit shall not incur expenditures in excess of the amount appropriated. During the year ended June 30, 2014, the City incurred expenditures in certain budgetary funds which were in excess of the amounts appropriated, as follows: Total Amount of Budget Appropriations Expenditures Variance General fund: General government: Mayor $ 819,940 $ 826,471 $ 6,531 Office of community media 336,680 336,702 22 Planning / neighborhood development 854,984 961,187 106,203 Public works 9,801,661 10,095,380 293,719 Recreation and culture 7,135,872 7,741,209 605,337 Other functions: Human relations / community services 878,162 926,388 48,226 Transfers out 9,439,986 9,503,151 63,165 State and federal grants: Public works 528,059 3,361,393 2,833,334 The above budgeted amounts are presented at the activity level, which is the required minimum level of control per the Michigan Uniform Budget Manual. The budget variance in the state and federal grants fund was caused by recording donated infrastructure (constructed by the State of Michigan Department of Transportation) in the fund. This transaction included both intergovernmental revenue and expenditures (and so had no effect on ending fund balance), but was not reflected in the amended budget, as it was attributable to amounts recorded for in-kind roadwork performed by the State, and therefore not subject to appropriation. 3. DEFICIT FUND EQUITY Governmental activities reported a deficit in unrestricted net position in the amount of$46,344,555 at June 30, 2014. Total net position amounted to a positive $117,764,592. The community development block grant program special revenue fund reported a deficit unassigned fund balance of $200,000. Total fund balance (which included $200,000 classified as restricted related to a long- term advance), was $0. The special assessments capital projects fund reported a deficit fund balance of $322,157. The fund received a long-term advance from the general fund that was used to provide the working capital for the fund in prior years. The deficit is the result of deferred special assessments receivable. As special assessments are collected, this deficit will be eliminated, and the advance repaid. The golf enterprise fund reported a deficit in unrestricted fund net position of$6,077. The fleet maintenance internal service fund reported a deficit in unrestricted fund net position of $44,547. 74 CITY OF LANSING, MICHIGAN Notes to Financial Statements The Tax Increment Finance Authority component unit reported a deficit in unrestricted net position of $36,582,317 at June 30, 2014. The deficit is a result of full-accrual accounting for long-term debt, without reflecting a corresponding receivable for tax captures to be received in future periods (which cannot be accrued in accordance with generally accepted accounting principles). 4. DEPOSITS AND INVESTMENTS Following is a reconciliation of deposit and investment balances for the primary government (including both pooled cash and investments as well as pension and other postemployment benefit (OPEB) trust fund balances) as of June 30, 2014: Primary Component Government Units Totals Statement of net position Cash and investments $ 41,777,072 $ 2,303,169 $ 44,080,241 Restricted cash and investments 9,649,979 1,736,241 11,386,220 Statement of fiduciary net position Pension and OPEB trust funds: Cash and cash equivalents 46,678,018 - 46,678,018 Investments 515,186,363 515,186,363 Agency funds: Equity in pooled cash 91,410 91,410 Total $ 613,382,842 $ 4,039,410 $ 617,422,252 Deposits and investments Bank deposits: Checking/savings accounts $ 99,978,655 Investments - money markets 612,776 Investment in securities and mutual funds: Pooled investments 1,470,793 Pension and OPEB investments 515,186,363 Cash on hand 173,665 Total $ 617,422,252 Custodial Credit Risk - Deposits. Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned. State law does not require and the City does not have a policy for deposit custodial credit risk. As of year-end, $95,390,534 of the City's bank balance of $96,730,675 was exposed to custodial credit risk because it was uninsured and uncollateralized. The City's investment policy does not specifically address this risk, although the City believes that due to the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all bank deposits. As a result, the City evaluates each financial institution with which it deposits City funds and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level are used as depositories. 75 CITY OF LANSING, MICHIGAN Notes to Financial Statements Custodial Credit Risk - Investments. As of June 30, 2014, the City's pooled investments consisted entirely of mutual funds and money markets totaling $1,251,208 and $219,585, respectively. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State law does not require and the City does not have a policy for investment custodial credit risk. On the investments listed above, there is no custodial credit risk, as these investments are uncategorized as to credit risk. Credit Risk. State law limits investments to specific government securities, certificates of deposit and bank accounts with qualified financial institutions, commercial paper with specific maximum maturities and ratings when purchased, bankers acceptances of specific financial institutions, qualified mutual funds and qualified external investment pools as identified in the list of authorized investments in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on investment credit risk. Credit risk ratings, where applicable, are summarized as follows: S&P AAAm $ 251,618 SEW Al (Commercial Paper) 999,590 Unrated 219,585 Total $ 1,470,793 Interest Rate Risk. State law limits the allowable investments and the maturities of some of the allowable investments as identified in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Maturity dates for investments held at year-end are summarized as follows: Due within 1 year $ 999,590 No maturity 471,203 Total $ 1,470,793 Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of the City's investment in a single issuer. State law limits allowable investments but does not limit concentration of credit risk as identified in the list of authorized investments in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on concentration of credit risk. All investments held at year end are reported above. Pension and Other Postemployment Benefit Trust Funds The deposits and investments of the City's pension and other postemployment benefit trust funds are maintained separately from the City's pooled cash and investments, and are subject to separate investment policies and State statutes. Accordingly, the required disclosures for the pension and OPEB deposits and investments are presented separately. 76 CITY OF LANSING, MICHIGAN Notes to Financial Statements Deposits The pension and OPEB trust funds do not maintain any checking or other demand/time deposit accounts. Amounts reported as cash and cash equivalents in the statement of plan net position are composed entirely of short-term investments in money market accounts. Investments The Michigan Public Employees Retirement Systems' Investment Act, Public Act 314 of 1965, as amended, authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real estate, and various other investment instruments, subject to certain limitations. The retirement boards have the responsibility and authority to oversee the investment portfolio. Various professional investment managers are contracted to assist in managing the pension trust funds' assets. All investment decisions are subject to Michigan law and the investment policy established by the retirement boards. 77 CITY OF LANSING, MICHIGAN Notes to Financial Statements The investments of each pension trust fund are held in a bank administered trust fund. Following is a summary of pension and other postemployment benefits investments as of June 30, 2014: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals Investments at fair value, as determined by quoted market price U.S. treasuries: Not on securities loan $ 271,352 $ 369,800 $ 10,633 $ $ 651,785 On securities loan 5,047,164 5,200,928 - 10,248,092 U.S. agencies: Not on securities loan 17,511,071 22,060,296 6,699 39,578,066 On securities loan 575,953 732,300 - 1,308,253 Foreign government bonds: Not on securities loan 1,137,500 1,844,290 2,981,790 Domestic corporate securities: Not on securities loan 25,171,323 33,318,675 58,489,998 Domestic equities: Not on securities loan 34,224,454 58,637,817 92,862,271 On securities loan 13,894,980 17,666,669 - 31,561,649 International equities: Not on securities loan - - 9,487 9,487 Emerging markets equities 7,422,814 11,501,782 - 18,924,596 Collateralized mortgage obligations 481,948 558,755 1,040,703 Real estate investment funds 13,271,008 17,027,198 30,298,206 Equity mutual funds - 8,241,876 - - 8,241,876 International equity mutual funds 42,826,497 48,552,927 97,013 577,092 92,053,529 Domestic equity mutual funds 27,736,178 44,843,686 530,414 9,560,263 82,670,541 Domestic debt securities mutual funds - - 882,633 8,952,599 9,835,232 International debt securities mutual funds - 29,145,150 - - 29,145,150 Money market funds 2,353,700 2,512,793 418,646 - 5,285,139 Total investments $ 191,925,942 $ 302,214,942 $ 1,955,525 $ 19,089,954 $ 515,186,363 78 CITY OF LANSING, MICHIGAN Notes to Financial Statements Credit Risk. The City's pension investment policies provide that at least 90% of its investments in fixed income securities be rated BBB- or better by a nationally recognized statistical rating organization and the remaining 10% be rated at least B- or better. The City's pension and other postemployment benefits investments were rated by Standard &t Poor's as follows: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals AA $ 2,474,496 $ 3,644,864 $ $ $ 6,119,360 BBB 20,401,605 29,145,150 49,546,755 US government guaranteed 21,979,588 26,730,756 48,710,344 Not rated 25,332,527 32,605,430 8,952,599 66,890,556 Assets not subject to credit risk 121,737,726 210,088,742 1,955,525 10,137,355 343,919,348 $ 191,925,942 $ 302,214,942 $ 1,955,525 $ 19,089,954 $ 515,186,363 Custodial Credit Risk. For investments, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City's pension investment policies require that investment securities be held in trust by a third-party institution in the name of the pension trust fund. As such, although uninsured and unregistered, the City's pension investments are not exposed to custodial credit risk since the securities are held by the counterparty's trust department in the name of the pension trust fund. Short-term investments in money market funds and open-end mutual funds are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book form. Concentration of Credit Risk. At June 30, 2014, the pension and other postemployment benefits investment portfolio was concentrated as follows: Employees' Police and Fire Retirement Retirement Investment Type Issuer System System Common stock Northern Trust Back, N.A. 14.5% 14.8% Corporate bonds Western Asset Funds, Inc. 13.1% 11.0% International equity mutual funds Franklin Templeton 10.6% 9.6% International equity mutual funds SEI Trust Company 7.0% 0.0% International equity mutual funds Modrian 0.0% 8.1 International equity mutual funds Artisan 0.0% 7.9% The City's pension and other postemployment benefits investment policies require diversification of fixed income securities; however, they do not specify percentages of dollar amounts by industry or issuer. 79 CITY OF LANSING, MICHIGAN Notes to Financial Statements Foreign Currency Risk. Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. The pension and other postemployment benefits trusts' exposure to foreign currency risk is as follows: Employees' Police and Fire Employees' Retiree Investment Retirement Retirement Money Purchase Health Care (currency in U.S. dollar) System System Pension Plan VEBA Totals International equities: Canada $ 489,030 $ 739,632 $ $ $ 1,228,662 India 104,704 153,996 258,700 The Netherlands 120,702 188,068 308,770 Puerto Rico 121,394 191,787 313,181 Switzerland 63,371 99,583 162,954 United Kingdom 91,431 156,503 247,934 Foreign government bonds: Egypt 146,869 314,720 461,589 International equity mutual funds 50,249,311 89,199,859 106,500 577,092 140,132,762 Total $ 51,386,812 $ 91,044,148 $ 106,500 $ 577,092 $ 143,114,552 Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair market value of an investment. The City's pension investment policies provide that the average duration of fixed income securities shall not deviate from the Lehman Brothers Aggregate Index duration by +/-20%. As of June 30, 2014, maturities of the City's pension and other postemployment benefits trust debt securities were as follows: Investment Maturities (Fair Value) Less than More than 1 year 1-5 years 6-10 years 10 years Total Employees' Retirement System U.S. agencies $ $ 2,485,216 $ 569,363 $ - $ 3,054,579 U.S. government bonds 2,735,831 1,100,364 2,619,822 6,456,017 U.S. government mortgage backed securities 7,636 998,878 1,850,335 10,649,952 13,506,801 U.S. government issued commercial mortgage backed securities - 40,238 382,492 453,132 875,862 Commercial mortgage backed securities - - 117,639 364,310 481,949 Total $ 7,636 $ 6,260,163 $ 4,020,193 $ 14,087,216 $ 24,375,208 80 CITY OF LANSING, MICHIGAN Notes to Financial Statements Investment Maturities (Fair Value) Less than More than 1 year 1-5 years 6-10 years 10 years Total Police and Fire Retirement System U.S. agencies $ $ 3,322,411 $ 788,877 $ - $ 4,111,288 U.S. government bonds 3,122,018 743,863 3,549,135 7,415,016 U.S. government mortgage backed securities 8,646 1,777,555 2,458,857 12,625,304 16,870,362 U.S. government issued commercial mortgage backed securities - 50,989 448,703 553,175 1,052,867 Commercial mortgage backed securities - - 151,250 407,505 558,755 Corporate bonds 224,420 - - - 224,420 Total $ 233,066 $ 8,272,973 $ 4,591,550 $ 17,135,119 $ 30,232,708 Securities Lending. Under contracts approved by the City, the pension and other postemployment benefits trust funds are permitted to lend their securities to broker-dealers and banks (borrowers) for collateral that will be returned for the same securities in the future. The pension trust and other postemployment benefits funds' custodial banks manage the securities lending programs and receive cash as collateral. Collateral cash is initially pledged at 100 percent of the fair value of the securities lent, and may not fall below 95 percent of the market value of the loaned security during the term of the loan. At all times, collateral cannot be more than $100,000 less than the market value of the loaned security. There are no restrictions on the amount of securities that can be loaned. Securities on loan at year-end are classified in the preceding schedule of custodial credit risk according to the category for the collateral received on the securities lent. At year-end, the pension trust funds have no credit risk exposure to borrowers because the collateral held by the custodians exceeds the market value of the related securities lent. At June 30, 2014, the fair value of securities on loan by the Employees' Retirement System and the Police and Fire Retirement System were $19,518,097 and $23,599,897, respectively, for which the Plans' received cash collateral of $19,932,018 and $24,105,140, respectively. The contract with the pension and other postemployment benefits trust fund custodians require them to indemnify the City if the borrowers fail to return the securities (and if the collateral is inadequate to replace the securities lent) or fail to pay the City for income distributions by the securities' issuers while the securities are on loan. 81 CITY OF LANSING, MICHIGAN Notes to Financial Statements 5. RECEIVABLES Receivables are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts receivable $ 22,534,881 $ 5,903,964 $ 429,199 Taxes receivable 628,201 - - Special assessments receivable 500,778 - - Loansreceivable 1,432,342 706,238 377,389 Accrued interest receivable 2,147,867 126,864 - Due from other governments 10,925,845 - 156,806 Lease receivable - 21,880,012 - Allowance for uncollectible accounts (639,590) (360,733) - $ 37,530,324 $ 28,256,345 $ 963,394 Amount not expected to be collected within one year $ 4,024,805 $ 21,732,478 $ 377,389 82 CITY OF LANSING, MICHIGAN Notes to Financial Statements 6. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2014 was as follows: Beginning Ending Balance Additions Disposals Transfers Balance Governmental activities Capital assets, not being depreciated: Land $ 25,690,735 $ 34,937 $ - $ - $ 25,725,672 Construction in progress 5,289,601 4,487,045 (562,857) (6,932,376) 2,281,413 30,980,336 4,521,982 (562,857) (6,932,376) 28,007,085 Capital assets, being depreciated: Land improvements 16,050,745 369,734 852,452 17,272,931 Equipment and vehicles 40,374,027 2,174,031 (7,160,243) - 35,387,815 Buildings 118,768,823 (1,495,736) 6,079,924 123,353,011 Infrastructure 301,549,180 4,548,553 (3,105,415) - 302,992,318 476,742,775 7,092,318 (11,761,394) 6,932,376 479,006,075 Less accumulated depreciation for: Land improvements (7,485,484) (647,368) - - (8,132,852) Equipment and vehicles (34,913,711) (1,925,382) 7,160,243 (29,678,850) Buildings (67,532,695) (3,569,572) 798,741 (70,303,526) Infrastructure (204,850,283) (9,076,092) 2,962,527 (210,963,848) (314,782,173) (15,218,414) 10,921,511 - (319,079,076) Total capital assets being depreciated, net 161,960,602 (8,126,096) (839,883) 6,932,376 159,926,999 Governmental activities capital assets, net $ 192,940,938 $ (3,604,114) $ (1,402,740) $ - $ 187,934,084 At June 30, 2014, the City's governmental activities had outstanding commitments through construction contracts of approximately $1,970,000. 83 CITY OF LANSING, MICHIGAN Notes to Financial Statements Beginning Ending Balance Additions Disposals Transfers Balance Business-type activities Capital assets, not being depreciated: Land $ 13,483,909 $ - $ - $ - $ 13,483,909 Construction in progress 8,509,838 1,593,365 (245,438) (2,211,888) 7,645,877 21,993,747 1,593,365 (245,438) (2,211,888) 21,129,786 Capital assets, being depreciated: Land improvements 24,246,241 338,888 24,585,129 Equipment and vehicles 5,673,556 1,828,460 (339,047) 119,675 7,282,644 Buildings 214,841,965 927,845 100,000 215,869,810 Sewers 332,807,283 547,475 1,653,325 335,008,083 577,569,045 3,303,780 (339,047) 2,211,888 582,745,666 Less accumulated depreciation for: Land improvements (12,067,058) (610,084) - - (12,677,142) Equipment and vehicles (5,387,275) (278,991) 339,047 (5,327,219) Buildings (109,609,169) (5,160,199) - (114,769,368) Sewers (74,587,328) (6,903,682) (81,491,010) (201,650,830) (12,952,956) 339,047 (214,264,739) Total capital assets being depreciated, net 375,918,215 (9,649,176) - 2,211,888 368,480,927 Business-type activities capital assets, net $ 397,911,962 $ (8,055,811) $ (245,438) $ - $ 389,610,713 At June 30, 2014, the City's business-type activities had outstanding commitments through construction contracts of approximately $2,450,000. Depreciation expense was charged to functions/programs of the primary government as follows: Depreciation of governmental activities by function General government $ 1,796,295 Public safety 589,717 Public works 9,076,092 Recreation and culture 461,895 Community development 1,812,352 Internal service funds 1,482,063 Total depreciation expense - governmental activities $ 15,218,414 84 CITY OF LANSING, MICHIGAN Notes to Financial Statements Depreciation of business-type activities by function Sewage disposal system $ 10,315,747 Municipal parking system 2,379,395 Cemetery 16,190 Golf 91,118 Recycling 150,506 Total depreciation expense - business-type activities $ 12,952,956 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts payable $ 7,642,113 $ 1,273,180 $ 1,510,906 Deposits payable 47,028 61,495 - Accrued payroll 2,059,166 94,382 Contract retainage payable 200,089 - Due to other governments 3,250,250 Other 1,440,262 - - $ 14,638,908 $ 1,429,057 $ 1,510,906 8. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2014, was as follows: Due to and from primary government funds Due from Due to Other Other Funds Funds General fund $ 6,390,868 $ 20,613,895 Nonmajor governmental funds 4,055,000 3,780,000 Sewage disposal system 18,385,874 6,385,597 Municipal parking system 3,258,021 - Nonmajor enterprise funds - 5,271 Internal service funds - 1,305,000 Total $ 32,089,763 $ 32,089,763 The above balances generally resulted from a time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made. 85 CITY OF LANSING, MICHIGAN Notes to Financial Statements Advances to and from primary government funds Advances to Advances from Other Funds Other Funds Nonmajor governmental funds $ - $ 362,224 Municipal parking system 362,224 - Total $ 362,224 $ 362,224 Due to and from component units Due from Due to primary component government unit General fund $ - $ 2,206,788 Brownfield Redevelopment Authority 1,059,742 - Tax Increment Finance Authority 1,144,434 SmartZone 2,612 - Total $ 2,206,788 $ 2,206,788 For the year ended June 30, 2014, interfund transfers consisted of the following: Transfers In Nonmajor Nonmajor Internal governmental enterprise service Transfers Out General fund funds funds funds Total General fund $ - $ 7,840,967 $ 42,184 $ 1,620,000 $ 9,503,151 Nonmajor governmental funds 85,000 2,280,545 979,103 - 3,344,648 Sewage disposal system 300,000 - - 300,000 Nonmajor enterprise funds - 15,650 - - 15,650 Total $ 385,000 $ 10,137,162 $ 1,021,287 $ 1,620,000 $ 13,163,449 Transfers are used to: (1) move revenues from the fund that is required to collect them to the fund that is required or allowed to expend them; (2) move receipts restricted to or allowed for debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. 86 CITY OF LANSING, MICHIGAN Notes to Financial Statements 9. LONG-TERM DEBT General obligation bonds. The government issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the government. These bonds are issued as 10 to 30-year serial bonds with varying amounts of principal maturing each year. General obligation bonds currently outstanding are as follows: Interest Original Rate Amount Amount General obligation bonds Governmental activities: 2006 Lansing Center Limited Tax Bonds 3.50-4.30% $ 4,000,000 $ 2,330,000 2005 Building Authority Refunding Bonds 3.50-5.00% 1,470,000 615,000 2007 Michigan Transportation Fund Limited Tax Bonds 3.625-5.00% 1,137,600 396,000 2007 Michigan Transportation Fund Limited Tax Bonds 3.625-5.00% 3,602,400 1,254,000 2007 Fire Station Refunding Bonds 3.625-5.00% 1,780,000 1,000,000 2008 Michigan Transportation Fund Limited Tax Bonds 3.00-4.00% 3,500,000 1,910,000 2009 Capital Improvement Bonds - Limited Tax General 3.15-6.85% 10,197,000 9,380,000 2010 Recovery Zone Economic Development Bonds 3.40-7.25% 3,200,000 2,925,000 2010 Refunding Bonds - Limited Tax General Obligation 2.60-2.65% 2,470,000 1,540,000 2013 Refunding Bonds - Limited Tax General Obligation Energy Efficiency Refunding Bonds 2.40% 5,645,000 5,305,000 2013 Refunding Bonds - Limited Tax General Obligation Phone System Refunding Bonds 2.40% 240,000 180,000 2013 Operations and Maintenance Limited Tax Refunding 2.40% 465,000 310,000 $ 37,707,000 $ 27,145,000 87 CITY OF LANSING, MICHIGAN Notes to Financial Statements Interest Original Rate Amount Amount Business-type activities: 2005 Building Authority Refunding Bonds 3.50-5.00% $ 15,975,000 $ 8,900,000 2007 Building Authority Refunding Bonds 3.625-5.00% 7,965,000 7,775,000 1993 Limited Tax Sewer Bond - 5005-02 2.50% 8,150,050 470,000 1994 Limited Tax Sewer Bond - 5005-03 2.50% 3,234,722 370,000 1994 Limited Tax Sewer Bond - 5005-04 2.00% 3,727,138 241,170 1994 Limited Tax Sewer Bond - 5005-06 2.25% 7,595,611 675,000 1996 Limited Tax Sewer Bond - 5005-07 2.25% 3,365,073 590,073 1996 Limited Tax Sewer Bond - 5005-08 2.25% 3,995,000 950,000 1997 Limited Tax Sewer Bond - 5005-09 2.25% 4,746,780 1,361,780 1998 Limited Tax Sewer Bond - 5005-10 2.25% 10,539,950 3,604,950 1999 Limited Tax Sewer Bond - 5005-11 2.50% 10,120,000 3,585,000 2000 Limited Tax Sewer Bond - 5005-12 2.50% 9,447,830 3,797,830 2001 Limited Tax Sewer Bond - 5005-13 2.50% 10,573,046 4,818,046 2002 Limited Tax Sewer Bond - 5005-14 2.50% 12,381,131 6,821,131 2003 Limited Tax Sewer Bond - 5005-15 2.50% 10,259,826 6,170,688 2004 Limited Tax Sewer Bond - 5005-16 2.13% 3,070,277 2,447,649 2005 Limited Tax Sewer Bond - 5005-17 2.13% 1,609,661 5,048,778 2005 Limited Tax Sewer Bond - 5005-18 1.63% 13,389,371 8,819,371 2006 Limited Tax Sewer Bond - 5005-19 1.63% 18,216,346 13,181,346 2007 Limited Tax Sewer Bond - 5005-20 1.63% 24,244,726 18,514,726 2008 Limited Tax Sewer Bond - 5005-21 2.50% 27,500,453 22,920,453 2009 Limited Tax Sewer Bond - 5005-22 2.50% 15,615,000 13,220,604 2010 Limited Tax Sewer Bond - 5411-01 2.50% 8,548,000 8,208,000 2009 Capital Improvement Bonds 4.10-7.05% 9,803,000 9,655,000 2009 Building Authority Refunding Bonds 6.014-6.584% 8,161,691 8,161,691 2012 Building Authority Refunding Bonds 0.55-3.70% 7,200,000 6,805,000 2013 Building Authority Refunding Bonds 2.40% 735,000 370,000 2013 Building Authority Golf Course Refunding Bonds 2.40% 405,000 305,000 2014 Building Authority Refunding Bonds 4.75% 7,245,000 7,245,000 $ 267,819,682 $ 175,033,286 On April 9, 2014, the City issued $3,375,000 of Limited Tax General Obligation bonds under the state drinking water revolving fund to be used for sanitary sewer system improvements. Payments of amounts drawn are to be made semi-annually over a 20 year period, beginning on April 1, 2016. Interest is charged on the outstanding balance at 2.50 percent. As of June 30, 2014, no amounts had been drawn on this loan. Refunded and Defeased Debt At year end, defeased bonds outstanding consisted of $4,140,000 of 1990 Building Authority Bonds, scheduled to be paid by the escrow agent on June 1, 2015; $10,415,000 of 1990 Tax Increment Finance Authority Bonds, scheduled to be paid by the escrow agent in installments on May 1 of years 2016 through 2020; and $2,565,000 in 1994 Tax Increment Financing Bonds, scheduled to be paid by the escrow agent on May 1 of years 2015 and 2016. 88 CITY OF LANSING, MICHIGAN Notes to Financial Statements During fiscal year 2014, the City advance refunded $4,975,000 of 1990 Building Authority Bonds to provide resources to purchase U.S. government securities that were placed in an escrow fund for the purpose of generating resources for all future debt service payments of $4,975,000 of refunded debt. As a result, the bonds are considered defeased and the liability has been removed from the statement of net position. The reacquisition price of the refunding bonds was less than the carrying amount of the refunded debt and remaining unamortized discount by $1,156,324 and, accordingly, that amount is being amortized over the remaining years of the refunded debt. The refunding resulted in an increase in future debt service cash flows of $7,859,444 and an economic loss of$375,159. During fiscal year 2014, the Tax Increment Financing Authority component unit advance refunded $612,587 of principal and $1,952,413 of accrued interest related to 1994 Tax Increment Revenue Bonds to provide resources to purchase U.S. government securities that were placed in an escrow fund for the purpose of generating resources for all future debt service payments on $2,565,000 of refunded debt. As a result, the bonds are considered defeased and the liability has been removed from the statement of net position. The reacquisition price of the refunding bonds was less than the carrying amount of the refunded debt by $8,863 and, accordingly, is being amortized of the remaining years of the refunded debt. The refunding resulted in an increase in future debt service cash flows of $4,025,425 and an economic loss of$312,935. Revenue bonds. The City also issues bonds where the income derived from the acquired or constructed assets is pledged to pay debt service. Revenue bonds outstanding at year-end are as follows: Interest Original Rate Amount Amount Revenue bonds - business type activities 2013 Sewer Revenue and Refunding Bond 2.40% $ 64,330,000 $ 21,765,000 Installment purchase agreements. The government enters into installment purchase agreements for equipment and related capital assets. Installment purchase agreements outstanding at year-end are as follows: Interest Original Rate Amount Amount Installment purchase agreements Governmental activities: 2005 Lease Purchase Agreement - LEPFA Carpet 4.51% $ 126,418 $ 15,459 2005 Lease Purchase Agreement - LEPFA Equipment 4.24% 81,500 14,553 2012 Lease Purchase Agreement - Snowmobile 2.40% 147,046 63,199 2013 Lease Purchase Agreement - Garage 2.40% 1,892,332 1,518,630 2014 Lease Purchase Agreement - Recycling Trucks 1.96% 1,550,855 1,488,722 $ 3,798,151 $ 3,100,563 89 CITY OF LANSING, MICHIGAN Notes to Financial Statements Loans payable. The government has entered into loan agreements with the certain State agencies for program purposes. Loans payable at year-end are as follows: Interest Original Rate Amount Amount Loans payable Governmental activities: 2004 Michigan Department of Transportation Loan 3.00% $ 1,266,000 $ 175,934 HUD Section 108 Loan 2.40% 5,900,000 5,900,000 2014 SIB Loan 3.00% 986,300 986,300 $ 8,152,300 $ 7,062,234 Changes in long-term debt. Long-term liability activity for the year ended June 30, 2014, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities General obligation bonds $ 29,932,000 $ - $ 2,787,000 $ 27,145,000 $ 2,915,000 Installment purchase agreements 2,807,838 1,550,855 1,258,130 3,100,563 624,065 Loans payable 6,246,743 986,300 170,809 7,062,234 175,934 Total installment debt 38,986,581 2,537,155 4,215,939 37,307,797 3,714,999 Deferred amounts: For issuance discounts (93,487) - (6,833) (86,654) - For issuance premiums 156,091 - 34,143 121,948 - Compensated absences 10,138,900 10,153,254 10,138,900 10,153,254 1,061,687 Accrued workers compensation 6,986,062 6,875 1,025,344 5,967,593 922,154 Accrued tax settlement 156,483 - 52,161 104,322 52,161 $ 56,330,630 $ 12,697,284 $ 15,459,654 $ 53,568,260 $ 5,751,001 90 CITY OF LANSING, MICHIGAN Notes to Financial Statements Beginning Ending Due Within Balance Additions Reductions Balance One Year Business-type activities General obligation bonds $ 182,127,578 $ 10,600,638 $ 17,694,930 $ 175,033,286 $ 12,589,366 Revenue bonds 25,030,000 - 3,265,000 21,765,000 1,490,000 Installment purchase agreements - 1,737,700 69,619 1,668,081 208,649 Loans payable 1,702,664 - 1,702,664 - - Total installment debt 208,860,242 12,338,338 22,732,213 198,466,367 14,288,015 Deferred amounts: For issuance discounts (2,020,876) (90,562) (1,238,800) (782,377) - For issuance premiums 2,751,555 - 240,165 2,511,390 - Compensated absences 733,908 866,003 733,908 866,003 38,313 $ 210,324,829 $ 13,113,779 $ 22,467,486 $ 201,061,383 $ 14,326,328 For the governmental activities, compensated absences and other long-term debt are generally liquidated by the general fund. Debt service requirements to maturity for all installment debt of the City are as follows: Year Governmental Activities Business-type Activities Ending June 30 Principal Interest Total Principal Interest Total 2015 $ 3,714,999 $ 1,165,100 $ 4,880,099 $ 14,288,015 $ 5,842,667 $ 20,130,682 2016 3,626,430 1,104,077 4,730,507 14,129,564 5,129,518 19,259,082 2017 3,638,884 961,378 4,600,262 13,762,020 4,758,314 18,520,334 2018 3,557,278 829,484 4,386,762 13,756,223 4,387,717 18,143,940 2019 2,730,666 712,539 3,443,205 13,777,360 4,034,799 17,812,159 2020-2024 10,304,539 2,303,794 12,608,333 68,221,571 14,280,657 82,502,228 2025-2029 7,430,000 882,463 8,312,463 43,392,558 6,279,535 49,672,093 2030-2034 2,305,001 17,038 2,322,039 12,304,057 2,337,240 14,641,297 2035-2039 - - - 4,834,999 710,362 5,545,361 $ 37,307,797 $ 7,975,873 $ 45,283,670 $ 198,466,367 $ 47,760,809 $ 246,227,176 91 CITY OF LANSING, MICHIGAN Notes to Financial Statements 10. FUND BALANCES - GOVERNMENTAL FUNDS In accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the City classifies fund balances based primarily on the extent to which it is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Detailed information on fund balances of governmental funds is as follows: Nonmajor General Governmental Fund Funds Totals Nonspendable Inventories $ 49,601 $ 833,380 $ 882,981 Prepaids 30,169 - 30,169 Corpus of permanent fund - 1,718,595 1,718,595 79,770 2,551,975 2,631,745 Restricted Donations 36,854 - 36,854 Major and local streets - 5,449,942 5,449,942 Drug law and narcotics enforcement 1,084,370 1,084,370 Various state and federal grants 4,353 4,353 Shopping district events and maintenance 12,609 12,609 Building permit activity 168,229 168,229 Capital improvements (unexpended bond proceeds) - 183,425 183,425 36,854 6,902,928 6,939,782 Committed Police and fire services 1,810,325 - 1,810,325 By ordinance (budgetcarryforwards) 228,283 - 228,283 Community development - 200,000 200,000 City parks 466,888 466,888 Capital improvements - 3,956,224 3,956,224 2,038,608 4,623,112 6,661,720 Unassigned (deficit) 7,052,830 (522,157) 6,530,673 Total fund balances - governmental funds $ 9,208,062 $ 13,555,858 $ 22,763,920 92 CITY OF LANSING, MICHIGAN Notes to Financial Statements 11. NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of June 30, 2014, was as follows: Governmental Business-type Component Activities Activities Units Capital assets: Capital assets not being depreciated $ 28,007,085 $ 21,129,786 $ Capital assets being depreciated, net 159,926,999 368,480,927 14,398 Total capital assets 187,934,084 389,610,713 14,398 Related debt: General obligation bonds 27,145,000 175,033,286 - Revenue bonds - 21,765,000 Installment purchase agreements 3,100,563 1,668,081 Loans payable 7,062,234 - Unamortized bond discounts (86,654) (782,377) Unamortized bond premiums 121,948 2,511,390 Deferred loss on bond refunding (201,592) (3,163,496) Amounts under leases receivable - (21,880,012) Unexpended bond proceeds (183,425) - Totalrelated debt 36,958,074 175,151,872 - Net investment in capital assets $ 150,976,010 $ 214,458,841 $ 14,398 12. SEGMENT INFORMATION - ENTERPRISE FUNDS The government issued revenue bonds to finance certain improvements to its sewage disposal system. Because the Sewage Disposal System, an individual fund that accounts entirely for the government's sewage activities, is a segment and is reported as a major fund in the fund financial statements, separate segment disclosures herein are not required. 13. RISK MANAGEMENT The City of Lansing is exposed to various risks of loss related to property loss, torts, errors and omissions and employee injuries. The City carries commercial insurance for claims relating to general liability, property, electronic data processing, boiler and machinery, police professional and errors and omissions. The City has not experienced settlements in excess of insurance coverage during the past three years. The City is uninsured for acts of nature and environmental clean-up costs. 93 CITY OF LANSING, MICHIGAN Notes to Financial Statements The City is self-funded for Blue Cross Blue Shield healthcare coverage for employees and retirees. The City maintains stop/loss coverage that limits its per-case exposure to $250,000. The City estimates healthcare claims that are incurred but not reported as of year-end, which is accounted for in the City's Fringe Benefits Internal Service Fund. Changes in the estimated liability were as follows: Fiscal Year Ended June 30, 2014 2013 Estimated liability, beginning of year $ 814,014 $ 897,523 Estimated claims incurred, including changes in estimates 11,756,639 11,130,338 Claim payments (11,738,845) (11,213,847) Estimated liability, end of year $ 831,808 $ 814,014 The City is self-insured for workers' compensation costs. The City estimates the liability for workers' compensation claims that have been incurred through the end of the fiscal year, including those claims that have been reported as well as those that have not yet been reported to the City. The current liability is accounted for in the general fund, with long term liabilities accounted for in the Statement of Net Position. The City has liability insurance coverage up to a maximum amount of $16,000,000 per occurrence with a $350,000 deductible. Changes in the estimated long-term liability as well as the total estimated cost of claims for the past two fiscal years were as follows: Fiscal Year Ended June 30, 2014 2013 Estimated liability, beginning of year $ 6,986,062 $ 7,131,238 Estimated claims incurred, including changes in estimates 6,875 1,118,901 Claim payments (1,025,344) (1,264,077) Estimated liability, end of year $ 5,967,593 $ 6,986,062 14. PROPERTY TAXES Property taxes attach as an enforceable lien on property as of the date they are levied. City, community college, and 50% of school taxes are levied and due July 1 and become delinquent after August 31. County taxes and the balance of school taxes are levied and due December 1 and become delinquent after February 14. In March, taxes on real property still delinquent are purchased by the County's tax revolving funds. Collections of community college, school, and county taxes and remittances are accounted for in the general fund. City property tax revenues are recognized in the fiscal year for which the taxes are levied to the extent that they result in current receivables (i.e., are collected within 60 days after fiscal year-end). The City is permitted by charter and state law to levy taxes up to $20.000 per $1,000 of assessed valuation for general operations other than the payment of principal and interest on long-term debt. The tax rate to finance general governmental services other than the payment of principal and interest on long-term debt for the year ended June 30, 2014 was $19.44 per $1,000 of taxable value. 94 CITY OF LANSING, MICHIGAN Notes to Financial Statements 15. CONTINGENT LIABILITIES Amounts received or receivable from grantor agencies are subject to audit and potential adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. The government is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the government's counsel that resolution of these matters will not have a material adverse effect on the financial condition of the government. 16. PENSION PLANS Employees'Retirement *stem Plan Description. The City sponsors and administers the Employees' Retirement System (the "Plan"), a single-employer, defined benefit pension plan that covers general full-time employees of the City of Lansing and employees of the 54-A District Court. It does not include elected officials, who are members of the Employees' Money Purchase Pension Plan, nor does it include police officers and firefighters, who are members of a separate City defined benefit pension plan. The Plan was established and may be amended by the City Council and is administered by 9-member Board of Trustees. The Board is comprised of The Mayor of the City, one member of the City Council appointed by the City Council, the City Treasurer, the City Human Resources Director, three members of the retirement system to be elected by the members of the system under rules adopted by the board, two residents of the State of Michigan appointed by the Mayor, by and with the consent of the City Council, one of which is a retiree of the retirement system. It is accounted for as a separate pension trust fund. Separate financial statements are not issued for the Plan. All members may retire at age 50 with 25 or more years of credited service, or age 58 with 8 or more years of credited service. Members are vested after completing 8 years of credited service. Retirement options that provide for survivor benefits are available to members. The plan also provides death and disability benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment prior to retirement will receive their benefit as a life annuity beginning at age 58. Summary of Significant Accounting Policies. The financial statements of the Plan are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period which the contributions are due. The City's contributions are recognized when due and a formal commitment to provide the contribution has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Administration of the Plan is funded through the Plan's investment earnings. Method Used to Value Investments. Plan investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the Plan Board of Trustees, with the assistance of a valuation service. 95 CITY OF LANSING, MICHIGAN Notes to Financial Statements Plan Membership. At June 30, 2014, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 885 Terminated employees entitled to but not yet receiving benefits 68 Vested and non-vested active participants 373 Total membership 1,326 Benefits Provided. Employees who retire with minimum age and years of service requirements are entitled to annual retirement benefits, payable in monthly installments for life, in an amount equal to a percentage of their final average compensation times years of credited service. Final average compensation is defined as the average of the highest annual compensation paid over 2 consecutive years of credited service within the last 10 years of credited service immediately preceding a member's termination of employment. The benefit payments are calculated using the following rates for the various groups of general employees: Bargaining Unit/Employee Multiplier Group Percentage United Auto Workers (UAW): Hired after January 18, 2013 1.70% All others 2.75% Teamsters Local 214: Hired after September 2012 1.25% All others 1.80% Teamsters Local 580: Hired after May 2014 1.25% All others 1.80% Non-bargaining and all others 1.60% 96 CITY OF LANSING, MICHIGAN Notes to Financial Statements Contributions. The contribution requirements of Plan members are established and may be amended by the City Council in accordance with City policies, union contracts, and Plan provisions. Employees are required to make contributions to the Plan in rates from 3.00 to 6.50 percent depending on bargaining unit and hire date. The City is required to contribute at actuarially determined rates expressed as a percentage of covered payroll. The City's contribution rate for the plan for the year ended December 31, 2013 was 43.5 percent of projected valuation payroll. Bargaining Unit/Employee Contribution Group Percentage United Auto Workers (UAW) 3.00% Teamsters Local 214: Hired after September 2012 5.00% All others 6.50% Teamsters Local 580: Hired after May 2014 5.00% All others 6.35% District court Teamsters and exempt: Hired after April 2014 5.00% All others 5.50% All others 6.50% Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return. For the year ended June 30, 2014, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 12.7 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2014, the Plan held certain investments (other than those issued or explicitly guaranteed by the U.S. government, mutual funds, external investment pools, or other pooled investments) in certain organizations that represent 5 percent or more of the Plan's fiduciary net position. Please see Note 4 for the details of these concentrations. 97 CITY OF LANSING, MICHIGAN Notes to Financial Statements Reserves. In accordance with the Plan policy, the City establishes reserves for various purposes. The reserves are adjusted annually based on recommendations from the City's actuaries. The policy for creating and adjusting reserves was established and can be amended by the Plan Board of Trustees. A summary of the Plan reserves at June 30, 2014 is as follows: Reserve/Group Balance Employee savings fund $ 29,631,080 Retirement reserve fund 146,374,121 Pension accumulation fund (8,011,319) Members benefit fund 17,124,778 Health insurance fund 20,414,547 Net Pension Liability. The components of the net pension liability for the employees' retirement system at June 30, 2014 were as follows: Total pension liability $ 323,057,486 Plan fiduciary net position 185,118,660 Net pension liability $ 137,938,826 Plan fiduciary net position as percentage of total pension liability 57.30% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of June 30, 2014, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.10% Salary increases 3.10%, plus service based increases Investment rate of return 7.60%, net of investment expense and including inflation 98 CITY OF LANSING, MICHIGAN Notes to Financial Statements Mortality is based on the RP-2000 tables (with Blue Collar adjustments for Police and Fire) for males and females. For Disabled members, the disabled versions of these tables are used with a 5 year age setback for males. Each of these tables is projected to 2008 using Scale BB. Future improvements in mortality for non- disabled members are anticipated by projecting these tables an additional 15 years using 50% of Scale BB. The actuarial assumptions used in the June 30, 2014 valuation were based on the results of actuarial experience analysis conducted in 2012. The next assumption review is scheduled for 2016. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. This is then modified through a Monte- Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected return. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2014, and the final investment return assumption, are summarized in the following table: Long-term Money- Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 47.00% 5.80% 2.73% International equity 18.00% 6.19% 1.11% Fixed income 29.00% 2.30% 0.67% Real estate 5.00% 4.20% 0.21% Cash 1.00% 1.00% 0.01% 100.00% 4.73% Inflation 3.10% Risk adjustments -0.23% Investment rate of return 7.60% Discount Rate. The discount rate used to measure the total pension liability was 7.35%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be exhausted in the year 2056. Therefore, the discount rate represents the single equivalent rate resulting from discounting at the long-term expected rate of return until 2056, and discounting with the 20-year AA municipal bond index rate of 3.75% thereafter. This projection is done on a closed group basis, per GASB requirements. On an ongoing, open- group basis, it is unlikely that the funds will be depleted because funding progress is frequently reviewed and adjustments are made to contribution levels. 99 CITY OF LANSING, MICHIGAN Notes to Financial Statements Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability of the City, calculated using the discount rate of 7.35 percent, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.35 percent) or 1-percentage point higher (8.35 percent) than the current rate: One Percent Current One Percent Decrease Discount Rate Increase (6.35%) (7.35%) (8.35%) Net pension liability $ 173,151,593 $ 137,938,826 $ 106,099,006 Employer Contributions. During the year ended June 30, 2014, total contributions of $9,361,009 were made in accordance with actuarially determined requirements, computed through an actuarial valuation performed as of June 30, 2012. Net Pension Obligation. The City's annual net pension cost (expense) is calculated based on the annual required contribution of the employer (ARC). The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Plan's annual net pension cost for the year, the amount actually contributed to the Plan, and changes in the net pension obligation: Annual required contribution $ 9,361,000 Interest on net pension obligation 4,873 Adjustment to annual required contribution (4,089) Net pension cost (expense) 9,361,784 Contributions made (9,361,009) Increase in net pension obligation 775 Net pension obligation, beginning of year 64,115 Net pension obligation, end of year $ 64,890 Employer contributions to the Plan for the current fiscal year and two years prior were as follows: Three-Year Trend Information Annual Net Pension Years Ended Pension Cost Percentage (Asset) June 30, (APC) Contributed Obligation 2012 $ 7,596,622 99% $ 62,909 2013 8,587,742 100% 64,115 2014 9,361,784 100% 64,890 100 CITY OF LANSING, MICHIGAN Notes to Financial Statements (1) The FY 2012 City contribution was reduced by $73,345 in recognition of additional contributions by International United Auto Workers (UAW) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ARC from the December 31, 2010 valuation. The schedule of employer contributions, presented as required supplementary information (RSI) following the notes to the financial statements, presents trend information about the amounts contributed to the plan by employers in comparison to the ARC, an amount that is actuarially determined in accordance with the parameters of GASB Statement No. 50. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost for each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. Poiice and Fire Retirement System Plan Description. The City sponsors and administers the Police and Fire Retirement System (the "Plan"), a single-employer, defined benefit pension plan that covers all police officers and fire fighters who are full- time employees of the City. The Plan was established and may be amended by the City Council and is administered by an 8-member Board of Trustees. The Board is comprised of The Mayor of the City, one member of the City Council appointed by the City Council, a resident of the City who shall be appointed by the Mayor, by and with the consent of Council, two members each of the police and fire departments, to be elected by all the members of their respective departments. It is accounted for as a separate pension trust fund. Separate financial statements are not issued for the Plan. Members may retire at age 55, or at any age with 25 or more years of credited service. Members are vested after completing 10 years of credited service. Members are required to retire at age 60 (Police) or 70 (Fire). When an employee who had retired subsequent to August 31, 1966, dies, the plan provides for an automatic pension to the retiree's spouse. This automatic pension is equal to 50% of the regular retirement benefit the employee had been receiving at time of death. Effective July 30, 1990, members may elect a reduced benefit, either 93% or 86% of the regular benefit, thereby increasing the spouse pension to 75% or 86% of the regular benefit, respectively. Alternately, members may elect a non-spousal beneficiary option. The plan provides death and disability benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment have the option of deferred retirement benefits until age 55 or withdrawing their contribution, thereby forfeiting any future benefits. Summary of Significant Accounting Policies. The financial statements of the Plan are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period which the contributions are due. The City's contributions are recognized when due and a formal commitment to provide the contribution has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Administration of the Plan is funded through the Plan's investment earnings. Method Used to Value Investments. Plan investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the Plan Board of Trustees, with the assistance of a valuation service. 101 CITY OF LANSING, MICHIGAN Notes to Financial Statements Plan Membership. At June 30, 2014, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 699 Terminated employees entitled to but not yet receiving benefits 38 Vested and non-vested active participants 352 Total membership 1,089 Benefits Provided. Annual retirement allowances are determined by multiplying final average compensation by 3.2% for the first 25 years of credited service. The maximum allowance is 80% of final average compensation. Final average compensation is the member's highest wages for 2 consecutive years. Contributions. The contribution requirements of Plan members are established and may be amended by the City Council in accordance with City policies, union contracts, and Plan provisions. Fire members are required to contribute 9.08 percent of their annual wages to the plan. Police supervisors are required to contribute 9.52 percent and police non-supervisors, 8.50 percent. Chapter 294 of the City of Lansing's Ordinance establishes benefit provisions and requires that the portion of the annuity and pension reserves (which are determined annually by the City's actuary) not financed by member contributions shall be financed by annual appropriations. The City's contribution rate for the plan for the year ended June 30, 2014 was 42.6 percent of projected valuation payroll. Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return. For the year ended June 30, 2014, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 10.1 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2014, the Plan held certain investments (other than those issued or explicitly guaranteed by the U.S. government, mutual funds, external investment pools, or other pooled investments) in certain organizations that represent 5 percent or more of the Plan's fiduciary net position. Please see Note 4 for the details of these concentrations. Reserves. In accordance with the Plan policy, the City establishes reserves for various purposes. The reserves are adjusted annually based on recommendations from the City's actuaries. The policy for creating and adjusting reserves was established and can be amended by the Plan Board of Trustees. A summary of the Plan reserves at June 30, 2014 is as follows: Reserve/Group Balance Retirement reserve fund $ 300,473,516 Health insurance fund 23,437,214 102 CITY OF LANSING, MICHIGAN Notes to Financial Statements Net Pension Liability. The components of the net pension liability for the police and fire retirement system at June 30, 2014, were as follows: Total pension liability $ 389,416,813 Plan fiduciary net position 300,473,516 Net pension liability $ 88,943,297 Plan fiduciary net position as percentage of total pension liability 77.16% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of June 30, 2014, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.10% Salary increases 3.10%, plus service based increases Investment rate of return 7.60%, net of investment expense and including inflation Mortality is based on the RP-2000 tables (with Blue Collar adjustments for Police and Fire) for males and females. For Disabled members, the disabled versions of these tables are used with a 5 year age setback for males. Each of these tables is projected to 2008 using Scale BB. Future improvements in mortality for non- disabled members are anticipated by projecting these tables an additional 15 years using 50% of Scale BB. The actuarial assumptions used in the June 30, 2014 valuation were based on the results of actuarial experience analysis conducted in 2012. The next assumption review is scheduled for 2016. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. This is then modified through a Monte- Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected return. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2014, and the final investment return assumption, are summarized in the following table: 103 CITY OF LANSING, MICHIGAN Notes to Financial Statements Long-term Money- Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 47.00% 5.80% 2.73% International equity 18.00% 6.19% 1.11% Fixed income 29.00% 2.30% 0.67% Real estate 5.00% 4.20% 0.21% Cash 1.00% 1.00% 0.01% 100.00% 4.73% Inflation 3.10% Risk adjustments -0.23% Investment rate of return 7.60% Discount Rate. The discount rate used to measure the total pension liability was 7.57%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be exhausted in the year 2072. Therefore, the discount rate represents the single equivalent rate resulting from discounting at the long-term expected rate of return until 2070, and discounting with the 20-year AA municipal bond index rate of 3.75% thereafter. This projection is done on a closed group basis, per GASB requirements. On an ongoing, open- group basis, it is unlikely that the funds will be depleted because funding progress is frequently reviewed and adjustments are made to contribution levels. Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability of the City, calculated using the discount rate of 7.57 percent, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.57 percent) or 1-percentage point higher (8.57 percent) than the current rate: One Percent Current One Percent Decrease Discount Rate Increase (6.57%) (7.57%) (8.57%) Net pension liability $ 127,496,909 $ 88,943,297 $ 48,101,183 Employer Contributions. During the year ended June 30, 2014, total contributions of $11,248,857 were made in accordance with actuarially determined requirements, computed through an actuarial valuation performed as of June 30, 2012. Net Pension Obligation. The City's annual net pension cost (expense) is calculated based on the annual required contribution of the employer (ARC). The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Plan's annual net pension cost for the year, the amount actually contributed to the Plan, and changes in the net pension obligation: 104 CITY OF LANSING, MICHIGAN Notes to Financial Statements Annual required contribution $ 11,248,857 Interest on net pension obligation 13,605 Adjustment to annual required contribution (11,415) Net pension cost (expense) 11,251,047 Contributions made (11,248,857) Increase in net pension obligation 2,190 Net pension obligation, beginning of year 179,013 Net pension obligation, end of year $ 181,203 Employer contributions to the Plan for the current fiscal year and two years prior were as follows: Three-Year Trend Information Annual Net Pension Years Ended Pension Cost Percentage (Asset) June 30, (APC) Contributed Obligation 2012 $ 9,241,957 98% $ 175,646 2013 10,136,966 100% 179,013 2014 11,251,047 100% 181,203 (1) The FY 2012 City contribution was reduced by $185,093 in recognition of additional contributions by International Association of Firefighters (IAFF) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ARC from the December 31, 2010 valuation. The schedule of employer contributions, presented as required supplementary information (RSI) following the notes to the financial statements, presents trend information about the amounts contributed to the plan by employers in comparison to the ARC, an amount that is actuarially determined in accordance with the parameters of GASB Statement No. 50. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost for each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. 105 CITY OF LANSING, MICHIGAN Notes to Financial Statements Financial statements for individual pension and employee benefit plans: Pension and Other Postemployment Benefits Net Position . Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Health Care Pension OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents $ 19,982,273 $ - $ 26,695,745 $ - $ $ $ 46,678,018 Investments: Money market funds 2,102,607 250,268 2,317,922 194,871 4,865,668 Government obligations 21,933,213 2,610,652 27,864,968 2,342,645 1,955,526 19,089,954 75,796,958 Corporate bonds 22,924,615 2,728,656 31,250,185 2,627,245 - - 59,530,701 Common stocks 49,634,397 5,907,851 80,996,763 6,809,505 143,348,516 Mutualfunds 74,916,563 8,917,120 136,347,889 11,462,948 231,644,520 Contribution receivable 1,854 - 3,668 - 1,209 - 6,731 Dividends and interest receivable 221,546 - 270,958 - 128,059 620,563 Total assets 191,717,068 20,414,547 305,748,098 23,437,214 1,956,735 19,218,013 562,491,675 Liabilities Accounts payable 6,598,408 - 5,274,582 - - - 11,872,990 Net position restricted for Pension benefits 185,118,660 - 300,473,516 - 1,956,735 - 487,548,911 Other postern ployment benefits 20,414,547 - 23,437,214 - 19,218,013 63,069,774 Total net position $ 185,118,660 $ 20,414,547 $ 300,473,516 $ 23,437,214 $ 1,956,735 $ 19,218,013 $ 550,618,685 106 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in Pension and Other Postemployment Benefits Net Position Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Health Care Pension OPEB System System OPEB Pension Plan VEBA Totals Additions Investment income: Net appreciation in fair value of investments $ 16,146,577 $ 2,811,623 $ 31,629,973 $ 3,054,556 $ $ $ 53,642,729 Interest income 1,060,804 - 1,290,464 - 257,135 2,266,611 4,875,014 Dividend income 680,254 1,096,184 - - 1,776,438 Investment expenses - - - (5,660) - (5,660) Net investment income 17,887,635 2,811,623 34,016,621 3,054,556 251,475 2,266,611 60,288,521 Contributions: Employer 9,361,009 11,048,992 11,248,857 11,198,633 20,176 750,000 43,627,667 Plan members 1,290,678 - 2,911,896 - 3,494 - 4,206,068 Total contributions 10,651,687 11,048,992 14,160,753 11,198,633 23,670 750,000 47,833,735 Total additions 28,539,322 13,860,615 48,177,374 14,253,189 275,145 3,016,611 108,122,256 Deductions Participant benefits 22,957,379 10,638,992 26,852,038 10,258,633 20,757 - 70,727,799 Administrative expense 741,037 - 1,141,506 - - 1,882,543 Total deductions 23,698,416 10,638,992 27,993,544 10,258,633 20,757 72,610,342 Change in net position 4,840,906 3,221,623 20,183,830 3,994,556 254,388 3,016,611 35,511,914 Net position restricted for pension and other postemployment benefits: Beginning of year 180,277,754 17,192,924 280,289,686 19,442,658 1,702,347 16,201,402 515,106,771 End of year $185,118,660 $ 20,414,547 $300,473,516 $ 23,437,214 $ 1,956,735 $ 19,218,013 $550,618,685 107 CITY OF LANSING, MICHIGAN Notes to Financial Statements 17. OTHER POSTEMPLOYMENT BENEFITS Primary Government Plan Description. The City of Lansing contributes to the Employees' Retirement System, the Police and Fire Retirement System, and the Voluntary Employees Beneficiary Association amounts to pre-fund postemployment healthcare. In the Employees' Retirement System and the Police and Fire Retirement System, these other postemployment benefits (OPEB) are set up as reserves in the pension plans, and their investments are commingled with the investments of the pension plan. Portfolio makeup is reported as a percentage of total pension plan assets. Earnings are calculated based on a seven year smoothed rate of return of the retirement systems. Eligible participants include any retirees who receive pension benefits under their respective pension plans, with the exception of Teamster 580 employees hired after May, 2014. OPEB plan provisions are established and may be amended by the City Council, subject to the City's various collective bargaining agreements. Separate financial statements are not prepared for the plans. Basis of Accounting. The Plans' financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plans. Method Used to Value Investments. Plan investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of each plans' board of trustees, with the assistance of a valuation service. Voluntary Employment Beneficiary Association(VEBV The City of Lansing Voluntary Employees Beneficiary Association (the "Plan") is a single-employer defined benefit post employment healthcare plan established by the City to provide medical and healthcare benefits for retirees and their beneficiaries. Eligible participants include any retirees who receive pension benefits under one of the City's pension plans. The Plan is funded by a trust agreement established pursuant to Section 501(c)(9) of the Internal Revenue Code that allows for the formation of a VEBA. During the year, the City contributed $750,000 to the Plan. Employees'Retirement System The City provides postemployment health care benefits, in accordance with labor agreements, to full-time employees of the City and employees of the 54-A District Court (not including police officers and firefighters who are members of the Police and Fire Retirement System). Members eligible for pension benefits under the Employees' Retirement System are also eligible to receive health care benefits, with the exception of Teamster 580 employees hired after May, 2014. The City provides the full cost of health benefits to retirees, payable to health care vendors, and also reimburses retirees eligible for Medicare benefits of $96.40 per month for each covered retiree and eligible dependent(s) eligible for retiree healthcare. The payments are charged to the fringe benefit internal service fund of the City and are recognized as expenses as payments are made. 108 CITY OF LANSING, MICHIGAN Notes to Financial Statements Membership of the Plan consisted of the following at December 31, 2011, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 675 Terminated plan members entitled to but not yet receiving benefits 65 Active plan members 481 Total 1,221 During the year, the City contributed $11,048,992 (direct benefit payments of $10,638,992 and City contributions of$410,000) to the Plan. Annual required contribution $ 14,040,043 Interest on net OPEB obligation 170,506 Adjustment to annual required contribution (152,930) Net OPEB cost (expense) 14,057,619 Contributions made (11,048,992) Increase in net OPEB obligation 3,008,627 Net OPEB obligation, beginning of year 3,965,258 Net OPEB obligation, end of year $ 6,973,885 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the current year and the two preceding years were as follows: Three-Year Trend Information Percentage of Annual Annual OPEB OPEB Cost Net OPEB Year Ended Cost Contributed Obligation 2012 $ 14,915,958 69.5% $ 1,337,371 2013 12,775,667 79.4% 3,965,258 2014 14,057,619 78.6% 6,973,885 The schedule of employer contributions, presented as required supplementary information (RSI) following the notes to the financial statements, presents trend information about the amounts contributed to the plan by employers in comparison to the ARC, an amount that is actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost for each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. 109 CITY OF LANSING, MICHIGAN Notes to Financial Statements Funded Status and Funding Progress. As of December 31, 2011, the most recent actuarial valuation date, the Plan was 12.6 percent funded. The actuarial accrued liability for benefits was $226,915,143, and the actuarial value of assets was $28,680,151, resulting in an unfunded actuarial accrued liability (UAAL) of $198,234,992. The covered payroll (annual payroll of active employees covered by the Plan) was $24,813,423, and the ratio of the UAAL to the covered payroll was 798.9 percent. The Employees' Retirement System and VEBA were combined in the actuarial valuation. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the December 31, 2011 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 4.3 percent investment rate of return (net of administrative expenses), which includes a 3.3 percent inflation assumption. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2011, was thirty years. Poiice and Fire Retirement System The City also provides postemployment health care benefits, in accordance with labor agreements, to members who are eligible to receive pension benefits under the Police and Fire Retirement System. The City provides the full cost of health benefits to retirees, payable to health care vendors, and also reimburses retirees eligible for Medicare benefits of $104.90 per month for each covered retiree and dependent(s). The payments are charged to the fringe benefit internal service fund of the City and are recognized as expenses as payments are made. 110 CITY OF LANSING, MICHIGAN Notes to Financial Statements Membership of the Plan consisted of the following at December 31, 2011, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 478 Terminated plan members entitled to but not yet receiving benefits 16 Active plan members 362 Total 856 During the year, the City contributed $11,198,633 (direct benefit payments of $10,258,633 and City contributions of $940,000) to the Plan. Annual required contribution $ 16,852,426 Interest on net OPEB obligation 1,455,249 Adjustment to annual required contribution (1,362,139) Net OPEB cost (expense) 16,945,536 Contributions made (11,198,633) Increase in net OPEB obligation 5,746,903 Net OPEB obligation, beginning of year 33,843,009 Net OPEB obligation, end of year $ 39,589,912 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the current year and the two preceding years were as follows: Three-Year Trend Information Percentage of Annual Annual OPEB OPEB Cost Net OPEB Year Ended Cost Contributed Obligation 2012 $ 17,844,115 55.4% $ 27,523,519 2013 17,489,692 63.9% 33,843,009 2014 16,945,536 66.1% 39,589,912 The schedule of employer contributions, presented as required supplementary information (RSI) following the notes to the financial statements, presents trend information about the amounts contributed to the plan by employers in comparison to the ARC, an amount that is actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost for each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. 111 CITY OF LANSING, MICHIGAN Notes to Financial Statements Funded Status and Funding Progress. As of December 31, 2011, the most recent actuarial valuation date, the Plan was 7.4 percent funded. The actuarial accrued liability for benefits was $252,220,445, and the actuarial value of assets was $18,678,699, resulting in an unfunded actuarial accrued liability (UAAL) of $233,541,746. The covered payroll (annual payroll of active employees covered by the Plan) was $25,128,835, and the ratio of the UAAL to the covered payroll was 929.4 percent. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the December 31, 2011 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 4.3 percent investment rate of return (net of administrative expenses), which includes a 3.0 percent inflation assumption. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2011, was thirty years. 18. OPERATING LEASE During fiscal year 2014, the City entered into an operating lease with the Lansing School District (the "District"), for approximately 86,900 square feet of the Hill Center for Academics and Technology for the purpose of operating a police precinct. The term of the lease runs through June 30, 2018. The City is required to make approximately $800,000 worth of improvements to the leased space, the cost of which will be capitalized by the District. In addition, beginning July 1, 2016, rent payments will be made to the District by the City in monthly installments of $2,083 ($25,000 annually) and $10,417 ($125,000 annually) for the years ended June 1, 2017 and 2018, respectively. 112 CITY OF LANSING, MICHIGAN Notes to Financial Statements 19. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT The City adopted the provisions of GASB Statement No. 65 (GASB 65), Items Previously Reported as Assets and Liabilities, in the current year. In addition to the revised classification of certain financial elements in the financial statements, the implementation of GASB 65 resulted in the elimination of bond issuance costs as an asset. As a result of this change, beginning net position in various funds and activities decreased by the following amounts: Amount of Opinion Unit Decrease Governmental Activities $ 160,441 Business-type Activities: Sewer Disposal System 524,852 Municipal Parking System 396,641 Nonmajor Enterprise Funds 3,292 Total business-type activities 924,785 Component Unit: Tax Increment Finance Authority 143,468 $ 1,228,694 20. SUBSEQUENT EVENTS On July 9, 2014, the City issued $2,360,000 of Limited Tax General Obligation bonds for sanitary sewer system improvements. Payments are to be made semi-annually over a 20 year period, beginning on April 1, 2016. Interest is charged on the outstanding balance at 2.50 percent. On August 7, 2014, the City issued $2,275,000 of capital improvement bonds. Payments are to be made semi-annually over a 3 year period, beginning on May 1, 2015. Interest is charged on the outstanding balance at rates that vary from 1.25 to 2.00 percent. On September 30, 2014, the City signed an installment purchase agreement for the purchase of police vehicles for a total of $491,241. Payments are to be made semi-annually over a 3 year period, beginning on April 1, 2015. The agreement includes interest at a rate of 1.44 percent. ■ ■ ■ ■ ■ 113 This page intentionally left blank. 114 REQUIRED SUPPLEMENTARY INFORMATION 115 CITY OF LANSING, MICHIGAN Required Supplementary Information Single-employer Defined Benefit Pension Plan Employees' Retirement System Schedules of Changes in Net Pension Liability and Related Ratios Fiscal Year Ending June 30, 2014 Total pension liability Service cost $ 2,982,624 Interest on total pension liability 22,722,630 Benefit changes - Difference between expected and actual experience Assumption changes Benefit payments, including refunds (22,790,522) Net change in total pension liability 2,914,732 Total pension liability, beginning of year 320,142,754 Total pension liability, end of year $ 323,057,486 Plan fiduciary net position Employer contributions $ 9,361,009 Employee contributions 1,290,678 Pension plan net investment income 17,887,635 Benefit payments (22,957,379) Refunds Pension plan administrative expense (741,037) Other - Net change in plan fiduciary net position 4,840,906 Plan fiduciary net position, beginning of year 180,277,754 Plan fiduciary net position, end of year $ 185,118,660 Net pension liability $ 137,938,826 Plan fiduciary net position as a percentage of total pension liability 57.3% Covered employee payroll $ 20,874,143 Net pension liability as a percentage of covered employee payroll 660.81 Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 116 CITY OF LANSING, MICHIGAN Required Supplementary Information Single-employer Defined Benefit Pension Plan Employees' Retirement System Schedule of the Net Pension Liability Plan Net Position as Net Pension Fiscal Year Percentage of Liability as Ending Total Pension Plan Net Net Pension Total Pension Covered Percentage of June 30, Liability Position Liability Liability Payroll Covered Payroll 2014 $323,057,486 $185,118,660 $137,938,826 57.3% $ 20,874,143 660.81% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 117 CITY OF LANSING, MICHIGAN Required Supplementary Information Single-employer Defined Benefit Pension Plan Employees' Retirement System Schedule of Contributions Actual Contribution Fiscal Year Actuarially Contribution as Percentage Ending Determined Actual Deficiency Covered of Covered June 30, Contribution* Contribution (Excess)* Payroll Payroll 2005 $ 4,675,000 $ 4,675,000 $ $ 30,851,000 15.2% 2006 4,900,000 4,900,000 31,944,000 15.3% 2007 5,231,000 5,231,000 31,797,000 16.5% 2008 6,022,000 6,022,000 29,688,000 20.3% 2009 6,048,000 6,477,000 429,000 30,602,000 21.2% 2010 6,472,349 6,043,861 (428,488) 27,766,628 21.8% 2011 7,297,083 7,297,083 - 26,068,735 28.0% 2012 7,596,879 7,523,534 (73,345) 22,838,598 32.9% 2013 8,586,536 8,586,536 20,874,143 41.1% 2014 9,361,009 9,361,009 21,521,242 43.5% * The City contributed in excess of its FY 2009 Actuarially Determined Employer Contribution (ADEC). The City's FY 2010 contribution was reduced by the dollar amount of the FY 2009 overpayment. The FY 2012 City contribution was reduced by$73,345 in recognition of additional contributions by United Auto Workers (UAW)employees, which were negotiated and contributed after the establishment of the June 30, 2012 ADEC from the December 31, 2010 valuation. The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly, the actuarially-determined contribution has been expressed above as a percentage of actual payroll. Notes to Schedule of Contributions Valuation Date December 31, 2013 (rolled forward to June 30, 2014) Notes Actuarially determined contribution rates are calculated as of June 30, which is 12 months prior to the beginning of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percent of payroll, closed Remaining amortization period 28 years Asset valuation method Open; 5-year smooth market Inflation 3.10% Salary increases 3.10% plus service based increases Investment rate of return 7.60% Retirement age Age-based table of rates that are specific to the type of eligibility condition. Last updated for the December 31, 2011 valuation. The next study is scheduled for Mortality RP2000 Combined Healthy Tables set back one year for females. For Disabled members, the disabled version of these tables are assumed. 118 CITY OF LANSING, MICHIGAN Required Supplementary Information Single-employer Defined Benefit Pension Plan Employees' Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Return(') 2014 12.70% Annual money-weighted rate of return, net of investment expenses Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 119 CITY OF LANSING, MICHIGAN Required Supplementary Information Single-employer Defined Benefit Pension Plan Police and Fire Retirement System Schedules of Changes in Net Pension Liability and Related Ratios Fiscal Year Ending June 30, 2014 Total pension liability Service cost $ 6,614,784 Interest on total pension liability 27,896,927 Benefit changes - Difference between expected and actual experience Assumption changes Benefit payments, including refunds (26,270,724) Net change in total pension liability 8,240,987 Total pension liability, beginning of year 381,175,826 Total pension liability, end of year $ 389,416,813 Plan fiduciary net position Employer contributions $ 11,248,857 Employee contributions 2,911,896 Pension plan net investment income 34,016,621 Benefit payments (26,852,038) Refunds Pension plan administrative expense (1,141,506) Other - Net change in plan fiduciary net position 20,183,830 Plan fiduciary net position, beginning of year 280,289,686 Plan fiduciary net position, end of year $ 300,473,516 Net pension liability $ 88,943,297 Plan fiduciary net position as a percentage of total pension liability 77.2% Covered employee payroll $ 25,611,974 Net pension liability as a percentage of covered employee payroll 347.27% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 120 CITY OF LANSING, MICHIGAN Required Supplementary Information Single-employer Defined Benefit Pension Plan Police and Fire Retirement System Schedule of the Net Pension Liability Plan Net Position as Net Pension Fiscal Year Percentage of Liability as Ending Total Pension Plan Net Net Pension Total Pension Covered Percentage of June 30, Liability Position Liability Liability Payroll Covered Payroll 2014 $389,416,813 $300,473,516 $ 88,943,297 77.2% $ 25,611,974 347.27% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 121 CITY OF LANSING, MICHIGAN Required Supplementary Information Single-employer Defined Benefit Pension Plan Police and Fire Retirement System Schedule of Contributions Actual Contribution Fiscal Year Actuarially Contribution as Percentage Ending Determined Actual Deficiency Covered of Covered June 30, Contribution* Contribution (Excess)* Payroll Payroll 2005 $ 3,333,869 $ 3,333,869 $ $ 27,855,000 12.0% 2006 4,658,703 4,658,703 29,582,000 15.7% 2007 5,385,960 5,385,960 29,600,000 18.2% 2008 6,520,974 6,520,974 30,161,000 21.6% 2009 6,094,397 6,483,000 388,603 30,443,000 21.3% 2010 7,179,360 6,790,757 (388,603) 28,536,056 23.8% 2011 8,240,688 8,240,688 - 25,128,835 32.8% 2012 9,242,173 9,057,080 (185,093) 26,121,411 34.7% 2013 10,133,599 10,133,599 25,636,626 39.5% 2014 11,248,857 11,248,857 26,405,725 42.6% * The City contributed in excess of its FY 2009 Actuarially Determined Employer Contribution (ADEC). The City's FY 2010 contribution was reduced by the dollar amount of the FY 2009 overpayment. The FY 2012 City contribution was reduced by $185,093 in recognition of additional contributions by International Association of Firefighters (IAFF) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ADEC from the December 31, 2010 valuation. The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly, the actuarially-determined contribution has been expressed above as a percentage of actual payroll. Notes to Schedule of Contributions Valuation Date December 31, 2013 (rolled forward to June 30, 2014) Notes Actuarially determined contribution rates are calculated as of June 30, which is 12 months prior to the beginning of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percent of payroll, closed Remaining amortization period 28 years Asset valuation method Open; 5-year smooth market Inflation 3.10% Salary increases 3.10% plus service based increases Investment rate of return 7.60% Retirement age Age-based table of rates that are specific to the type of eligibility condition. Last updated for the December 31, 2011 valuation. The next study is scheduled for Mortality RP2000 Combined Healthy Tables set back one year for females. For Disabled members, the disabled version of these tables are assumed. 122 CITY OF LANSING, MICHIGAN Required Supplementary Information Single-employer Defined Benefit Pension Plan Police and Fire Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Return(') 2014 10.60% Annual money-weighted rate of return, net of investment expenses Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 123 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefit Plans (amounts in thousands) Employees' Retirement System and VEBA-Schedule of Funding Progress Actuarial Actuarial UAAL as a Actuarial Value of Accrued Underfunded Funded Covered %of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2006 $ 14,337 $ 147,388 $ 133,051 9.7% $ 31,944 416.5% 12/31/2009 24,364 203,400 179,036 12.0% 30,602 585.0% 12/31/2011 28,680 226,915 198,235 12.6% 24,813 798.9% Police and Fire Retirement System -Schedule of Funding Progress Actuarial Actuarial Underfunded UAAL as a Actuarial Value of Accrued (Overfunded) Funded Covered %of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2006 $ 13,064 $ 155,559 $ 142,495 8.4% $ 29,582 481.7% 12/31/2009 17,477 214,899 197,422 8.1% 30,443 648.5% 12/31/2011 18,679 252,220 233,541 7.4% 25,129 929.4% Employees' Retirement System and VEBA-Schedule of Employer Contributions Annual Required Percentage Year Ended Contribution of ARC June 30, (ARC) Contributed 2012 $ 14,981 69.2% 2013 12,770 79.5% 2014 14,040 78.7% Police and Fire Retirement System-Schedule of Employer Contributions Annual Required Percentage Year Ended Contribution of ARC June 30, (ARC) Contributed 2012 $ 17,450 56.7% 2013 17,414 64.1 2014 16,852 66.5% 124 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 125 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds June 30, 2014 Special Debt Capital Revenue Service Projects Permanent Totals Assets Cash and cash equivalents $ 57,262 $ $ - $ - $ 57,262 Equity in pooled cash and investments 7,285,289 784,064 1,718,595 9,787,948 Accounts receivable, net 11,905 142,972 - 154,877 Special assessments receivable - 500,778 500,778 Loans receivable 1,432,342 - 1,432,342 Accrued interest receivable 2,147,867 - 2,147,867 Due from other funds - 4,055,000 4,055,000 Due from other governments 6,014,008 1,070 6,015,078 Inventories 833,380 - - 833,380 Total assets $ 17,782,053 $ $ 5,483,884 $ 1,718,595 $ 24,984,532 Liabilities Accounts payable $ 1,852,918 $ $ 859,572 $ - $ 2,712,490 Deposits payable 47,028 - 47,028 Accrued payroll 32,981 32,981 Due to other funds 3,780,000 - 3,780,000 Advances from other funds - 362,224 362,224 Due to other governments 333,749 - 333,749 Unearned revenue 335,397 - 335,397 Total liabilities 6,382,073 1,221,796 7,603,869 Deferred inflows of resources Unavailable revenue - loans receivable 3,380,209 - 3,380,209 Unavailable revenue - special assessments - 444,596 444,596 Total deferred inflows of resources 3,380,209 444,596 - 3,824,805 Fund balances Nonspendable 833,380 - 1,718,595 2,551,975 Restricted 6,719,503 183,425 - 6,902,928 Committed 666,888 3,956,224 4,623,112 Unassigned (deficit) (200,000) (322,157) - (522,157) Total fund balances 8,019,771 3,817,492 1,718,595 13,555,858 Total liabilities, deferred inflows of resources and fund balances $ 17,782,053 $ $ 5,483,884 $ 1,718,595 $ 24,984,532 126 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2014 Special Debt Capital Revenue Service Projects Permanent Totals Revenues Taxes and special assessments $ 409,030 $ 498,289 $ 97,774 $ $ 1,005,093 Intergovernmental 26,622,203 - - 26,622,203 Charges for services 3,884,685 803,748 4,688,433 Fines and forfeits 422,795 - 422,795 Interest - 713 6,703 7,416 Contributions 10,000 - - 10,000 Otherrevenues 457,126 - - - 457,126 Total revenues 31,805,839 498,289 902,235 6,703 33,213,066 Expenditures Current expenditures: General government 2,913,725 - - - 2,913,725 Public safety 5,366,896 5,366,896 Public works 3,361,393 3,361,393 Highways and streets 10,496,880 10,496,880 Recreation and culture 716,235 716,235 Community development 3,646,035 - 3,646,035 Debt service: Principal 1,372,809 650,000 2,022,809 Interest 606,914 139,888 - 746,802 Capital outlay 5,928,517 - 2,786,676 8,715,193 Total expenditures 34,409,404 789,888 2,786,676 - 37,985,968 Revenues over (under) expenditures (2,603,565) (291,599) (1,884,441) 6,703 (4,772,902) Other financing sources (uses) Transfers in 6,982,691 291,421 2,847,400 15,650 10,137,162 Transfers out (1,812,535) - (1,525,410) (6,703) (3,344,648) Proceeds on sale of capital assets 94,598 - 94,598 Issuance of long-term debt - - 986,300 - 986,300 Total other financing sources (uses) 5,264,754 291,421 2,308,290 8,947 7,873,412 Net change in fund balances 2,661,189 (178) 423,849 15,650 3,100,510 Fund balances, beginning of year 5,358,582 178 3,393,643 1,702,945 10,455,348 Fund balances, end of year $ 8,019,771 $ - $ 3,817,492 $ 1,718,595 $ 13,555,858 127 This page intentionally left blank. 128 CITY OF LANSING, MICHIGAN Nonmajor Special Revenue Funds Major Streets Fund - This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes, which is used for maintenance of major streets. Local Streets Fund - This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes, which is used for maintenance of local streets. Drug Law Enforcement Federal Fund - This fund accounts for federal revenues, from the Departmens of Justice and Treasury, set aside for drug law enforcement under the provisions of Federal Grant Agreements. Drug Law Enforcement State and Local Fund - This fund accounts for state and local revenues, from the Departmens of Justice and Treasury, set aside for drug law enforcement under the provisions of State of Michigan Public Act 135 of 1985, as amended. Community Development Block Grant Program Fund - This fund accounts for revenues received from the Department of Housing and Urban Development. These revenues are restricted to accomplishing the various objectives of Community Development Block Grant Programs, within specific target areas. Downtown Lansing, Inc. Fund - This fund accounts for assessments received from businesses located in the district. The revenues are used for special events and maintenance of the district. Building Department Fund - This fund accounts for revenues and expenditures resulting from the enforcement of the State Construction Code Act of 1999 (PA 245 of 1999). Parks Department Fund - This fund accounts for contributions and transfers which are restricted for park expenditures. The State and Federal Grants Fund - This fund accounts for all revenues received from miscellaneous grants and local contributions. These revenues are used for projects as detailed in individual grant applications. Tri-County Metro Fund - This fund accounts for the operations of the Tri-County Metro Narcotics Squad. 129 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2014 Drug Law Community Drug Law Enforcement Development Major Local Enforcement State and Block Grant Streets Streets Federal Local Program Assets Cash and cash equivalents $ - $ - $ - $ 20,000 $ - Equity in pooled cash and investments 2,571,869 2,110,793 97,931 350,578 49,604 Accounts receivable, net - - - 9,370 - Loans receivable - 1,385,000 Accrued interest receivable - - 2,147,867 Due from other governments 1,125,690 312,945 849,374 Inventories 821,293 12,087 - - - Total assets $ 4,518,852 $ 2,435,825 $ 97,931 $ 379,948 $ 4,431,845 Liabilities Accounts payable $ 558,314 $ 82,521 $ 7,838 $ 80,334 $ 192,902 Deposits payable - - - - - Accrued payroll 319 201 6,076 Due to other funds - 30,000 900,000 Due to other governments - - Unearned revenue - - - - - Total liabilities 558,633 112,722 7,838 80,334 1,098,978 Deferred inflows of resources Unavailable revenue - loans receivable - - - - 3,332,867 Fund balances Nonspendable 821,293 12,087 - - - Restricted 3,138,926 2,311,016 90,093 299,614 - Committed - - - - 200,000 Unassigned (deficit) - - - - (200,000) Total fund balances 3,960,219 2,323,103 90,093 299,614 - Total liabilities, deferred inflows of resources and fund balances $ 4,518,852 $ 2,435,825 $ 97,931 $ 379,948 $ 4,431,845 130 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ - $ - $ - $ - $ 37,262 $ 57,262 17,613 181,907 466,888 372,972 1,065,134 7,285,289 - 2,535 - - - 11,905 - 47,342 1,432,342 - - 2,147,867 3,702,452 23,547 6,014,008 - - - - - 833,380 $ 17,613 $ 184,442 $ 466,888 $ 4,122,766 $ 1,125,943 $ 17,782,053 $ 1,883 $ 880 $ - $ 878,403 $ 49,843 $ 1,852,918 - - - 47,028 47,028 3,121 15,333 7,271 660 32,981 - - 2,850,000 - 3,780,000 - 333,749 333,749 - - 335,397 - 335,397 5,004 16,213 4,071,071 431,280 6,382,073 - - 47,342 - 3,380,209 - - - - 833,380 12,609 168,229 - 4,353 694,663 6,719,503 - - 466,888 - - 666,888 - - - - - (200,000) 12,609 168,229 466,888 4,353 694,663 8,019,771 $ 17,613 $ 184,442 $ 466,888 $ 4,122,766 $ 1,125,943 $ 17,782,053 131 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds For the Year Ended June 30, 2014 Drug Law Community Drug Law Enforcement Development Major Local Enforcement State and Block Grant Streets Streets Federal Local Program Revenues Taxes and special assessments $ - $ - $ - $ $ Intergovernmental 8,040,045 1,900,816 313,525 4,152,230 Charges for services 865,337 750,509 - - - Fines and forfeits - - 226,551 Contributions - - - - Otherrevenues 176,297 9,268 - - 87,294 Total revenues 9,081,679 2,660,593 313,525 226,551 4,239,524 Expenditures Current expenditures: General government - - - - - Public safety 239,056 Public works - - - Highways and streets 5,912,679 4,584,201 Recreation and culture - - Community development - - Debt service: Principal 459,289 913,520 Interest 153,565 453,349 - Capital outlay 1,395,762 293,231 - 4,239,524 Total expenditures 7,921,295 6,244,301 239,056 - 4,239,524 Revenues over (under) expenditures 1,160,384 (3,583,708) 74,469 226,551 - Other financing sources (uses) Transfers in 681,652 5,653,200 15,624 - Transfers out (1,791,000) - - (21,535) Proceeds on sale of capital assets - - 94,598 Total other financing sources (uses) (1,109,348) 5,653,200 15,624 73,063 Net change in fund balances 51,036 2,069,492 90,093 299,614 Fund balances, beginning of year 3,909,183 253,611 - - Fund balances, end of year $ 3,960,219 $ 2,323,103 $ 90,093 $ 299,614 $ 132 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ 409,030 $ $ $ - $ - $ 409,030 - 11,517,692 697,895 26,622,203 4,658 2,264,181 - - 3,884,685 - - 196,244 422,795 10,000 - - 10,000 178,314 - 5,953 - 457,126 602,002 2,264,181 11,523,645 894,139 31,805,839 663,723 2,096,552 153,450 - 2,913,725 - - 4,206,880 920,960 5,366,896 3,361,393 - 3,361,393 - 10,496,880 716,235 716,235 3,646,035 3,646,035 - 1,372,809 606,914 - - - - 5,928,517 663,723 2,096,552 12,083,993 920,960 34,409,404 (61,721) 167,629 (560,348) (26,821) (2,603,565) 60,470 - 550,210 21,535 6,982,691 - - - (1,812,535) - - - 94,598 60,470 - 550,210 21,535 5,264,754 (1,251) 167,629 - (10,138) (5,286) 2,661,189 13,860 600 466,888 14,491 699,949 5,358,582 $ 12,609 $ 168,229 $ 466,888 $ 4,353 $ 694,663 $ 8,019,771 133 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2014 Major Streets Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ - $ - $ - Intergovernmental 7,362,880 8,040,045 677,165 Charges for services 471,240 865,337 394,097 Fines and forfeits - - - Contributions - - - Otherrevenues 46,000 176,297 130,297 Total revenues 7,880,120 9,081,679 1,201,559 Expenditures Current expenditures: General government - - - Public safety Public works - - Highways and streets 6,387,324 5,912,679 (474,645) Recreation and culture - - Community development - - Debt service: Principal 459,289 459,289 Interest 154,927 153,565 (1,362) Capital outlay 3,663,415 1,395,762 (2,267,653) Total expenditures 10,664,955 7,921,295 (2,743,660) Revenues over (under) expenditures (2,784,835) 1,160,384 3,945,219 Other financing sources (uses) Transfers in 1,441,540 681,652 (759,888) Transfers out (1,791,000) (1,791,000) Proceeds on sale of capital assets Total other financing sources (uses) (349,460) (1,109,348) (759,888) Net change in fund balances (3,134,295) 51,036 3,185,331 Fund balances, beginning of year 3,909,183 3,909,183 - Fund balances (deficit), end of year $ 774,888 $ 3,960,219 $ 3,185,331 134 Local Streets Drug Law Enforcement Federal Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 1,900,580 1,900,816 236 100,000 313,525 213,525 365,000 750,509 385,509 - - - - - - 240,000 (240,000) - 9,268 9,268 - 2,265,580 2,660,593 395,013 340,000 313,525 (26,475) 274,500 239,056 (35,444) 5,105,251 4,584,201 (521,050) 913,520 913,520 456,829 453,349 (3,480) 1,773,857 293,231 (1,480,626) - 8,249,457 6,244,301 (2,005,156) 274,500 239,056 (35,444) (5,983,877) (3,583,708) 2,400,169 65,500 74,469 8,969 5,653,200 5,653,200 - - 15,624 15,624 5,653,200 5,653,200 - - 15,624 15,624 (330,677) 2,069,492 2,400,169 65,500 90,093 24,593 253,611 253,611 - - - - $ (77,066) $ 2,323,103 $ 2,400,169 $ 65,500 $ 90,093 $ 24,593 continued... 135 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2014 Drug Law Enforcement State and Local Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ $ $ Intergovernmental Charges for services - Fines and forfeits 119,400 226,551 107,151 Contributions - - - Otherrevenues - - - Total revenues 119,400 226,551 107,151 Expenditures Current expenditures: General government - - - Public safety 50,000 (50,000) Public works - Highways and streets Recreation and culture Community development Debt service: Principal Interest Capital outlay - Total expenditures 50,000 - (50,000) Revenues over (under) expenditures 69,400 226,551 157,151 Other financing sources (uses) Transfers in - - - Transfers out (21,535) (21,535) Proceeds on sale of capital assets 91,000 94,598 (3,598) Total other financing sources (uses) 69,465 73,063 (3,598) Net change in fund balances 138,865 299,614 153,553 Fund balances, beginning of year - - - Fund balances (deficit), end of year $ 138,865 $ 299,614 $ 153,553 136 Community Development Block Grant Program Downtown Lansing, Inc. Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget $ $ $ $ 416,000 $ 409,030 $ (6,970) 5,241,943 4,152,230 (1,089,713) - - - - - 4,800 4,658 (142) - - - 10,000 10,000 68,653 87,294 18,641 205,580 178,314 (27,266) 5,310,596 4,239,524 (1,071,072) 636,380 602,002 (34,378) - - 684,170 663,723 (20,447) 5,310,596 4,239,524 (1,071,072) - 5,310,596 4,239,524 (1,071,072) 684,170 663,723 (20,447) - - (47,790) (61,721) (13,931) 60,470 60,470 60,470 60,470 12,680 (1,251) (13,931) 13,860 13,860 $ $ $ $ 26,540 $ 12,609 $ (13,931) continued... 137 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2014 Building Department Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ $ $ Intergovernmental Charges for services 2,182,300 2,264,181 81,881 Fines and forfeits - - - Contributions Otherrevenues - - - Total revenues 2,182,300 2,264,181 81,881 Expenditures Current expenditures: General government 2,346,616 2,096,552 (250,064) Public safety - - Public works Highways and streets Recreation and culture Community development Debt service: Principal Interest Capital outlay - - Total expenditures 2,346,616 2,096,552 (250,064) Revenues over (under) expenditures (164,316) 167,629 331,945 Other financing sources (uses) Transfers in 164,316 - (164,316) Transfers out - Proceeds on sale of capital assets - Total other financing sources (uses) 164,316 - (164,316) Net change in fund balances - 167,629 167,629 Fund balances, beginning of year 600 600 - Fund balances (deficit), end of year $ 600 $ 168,229 $ 167,629 138 Parks Department State and Federal Grants Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 19,166,562 11,517,692 (7,648,870) (476,193) 5,953 482,146 18,690,369 11,523,645 (7,166,724) 374,400 153,450 (220,950) 5,649,354 4,206,880 (1,442,474) 528,059 3,361,393 2,833,334 41,175 (41,175) 771,748 716,235 (55,513) - 7,370,926 3,646,035 (3,724,891) 41,175 (41,175) 14,694,486 12,083,993 (2,610,493) (41,175) 41,175 3,995,883 (560,348) (4,556,231) - 430,123 550,210 120,087 - 430,123 550,210 120,087 (41,175) - 41,175 4,426,007 (10,138) (4,436,145) 466,888 466,888 - 14,491 14,491 $ 425,713 $ 466,888 $ 41,175 $ 4,440,498 $ 4,353 (4,436,145) continued... 139 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2014 Tri-County Metro Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ - $ - $ Intergovernmental 697,895 697,895 Charges for services - - Fines and forfeits 435,000 196,244 (238,756) Contributions - - Otherrevenues - - Total revenues 1,132,895 894,139 (238,756) Expenditures Current expenditures: General government - - Public safety 1,151,494 920,960 (230,534) Public works - - Highways and streets Recreation and culture Community development Debt service: Principal Interest Capital outlay - - Total expenditures 1,151,494 920,960 (230,534) Revenues over (under) expenditures (18,599) (26,821) (8,222) Other financing sources (uses) Transfers in 21,535 21,535 - Transfers out (2,936) - 2,936 Proceeds on sale of capital assets - - - Total other financing sources (uses) 18,599 21,535 2,936 Net change in fund balances - (5,286) (5,286) Fund balances, beginning of year 699,949 699,949 Fund balances (deficit), end of year $ 699,949 $ 694,663 $ (5,286) concluded 140 CITY OF LANSING, MICHIGAN Nonmajor Debt Service Funds 1998 Building Authority Fund - This fund accounts for the accumulation of resources for payment of the 1998 $2,175,000 Building Authority Bonds. 1999 Fire Station Fund - This fund accounts for the accumulation of resources for payment of the 1999 $3,000,000 Unlimited Tax General Obligation Bonds. 2001 Fire Station Fund - This fund accounts for the accumulation of resources for the payment of the 2001 $4,000,000 Unlimited Tax General Obligation Bonds. 141 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2014 1998 1999 2001 Building Fire Fire Authority Station Station Totals Assets Equity in pooled cash and investments $ $ $ $ Fund balances Restricted $ $ $ $ 142 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds For the Year Ended June 30, 2014 1998 1999 2001 Building Fire Fire Authority Station Station Totals Revenues Taxes and special assessments $ - $ 259,585 $ 238,704 $ 498,289 Expenditures Debt service: Principal 135,000 205,000 310,000 650,000 Interest 36,100 54,763 49,025 139,888 Total expenditures 171,100 259,763 359,025 789,888 Revenues over (under) expenditures (171,100) (178) (120,321) (291,599) Other financing sources Transfers in 171,100 - 120,321 291,421 Net change in fund balances - (178) - (178) Fund balances, beginning of year 178 178 Fund balances, end of year $ $ - $ $ - 143 This page intentionally left blank. 144 CITY OF LANSING, MICHIGAN Nonmajor Capital Projects Funds 1990 Environmental 1 Fund - This fund accounts for the proceeds of the 1990 $7,000,000 environmental bonds. 1990 Environmental 11 Fund - This fund accounts for the proceeds of the 1990 $6,300,000 environmental bonds. Special Assessments Fund - This fund is used to account for the financing of public improvements deemed to benefit the properties against which special assessments are levied. Lansing Center Improvements Fund - This fund accounts for the proceeds of the 2006 $4,000,000 Lansing Center limited tax bonds. Other Capital Projects Fund - This fund accounts for miscellaneous capital projects. 145 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2014 1990 1990 Lansing Environ- Environ- Special Center mental mental11 Assessments Improvements Assets Equity in pooled cash and investments $ 382 $ 158,892 $ $ 53,336 Accounts receivable, net - - - Special assessments receivable: Current 56,182 Deferred 444,596 Due from other funds - Due from other governments - - 1,070 - Total assets $ 382 $ 158,892 $ 501,848 $ 53,336 Liabilities Accounts payable $ $ 2,417 $ 17,185 $ 26,768 Advance from other funds - 362,224 - Total liabilities 2,417 379,409 26,768 Deferred inflows of resources Unavailable revenue - special assessments - 444,596 - Fund balances Restricted 382 156,475 - 26,568 Committed - - - Unassigned (deficit) - - (322,157) - Total fund balances (deficit) 382 156,475 (322,157) 26,568 Total liabilities, deferred inflows of resources and fund balances $ 382 $ 158,892 $ 501,848 $ 53,336 146 Other Totals $ 571,454 $ 784,064 142,972 142,972 - 56,182 - 444,596 4,055,000 4,055,000 - 1,070 $ 4,769,426 $ 5,483,884 $ 813,202 $ 859,572 - 362,224 813,202 1,221,796 - 444,596 - 183,425 3,956,224 3,956,224 - (322,157) 3,956,224 3,817,492 $ 4,769,426 $ 5,483,884 147 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Capital Projects Funds For the Year Ended June 30, 2014 1990 1990 Lansing Environ- Environ- Special Center mental mental11 Assessments Improvements Revenues Special assessments $ $ $ 97,774 $ Charges for services - Interest - Total revenues 97,774 - Expenditures Capital outlay 14,217 - 47,675 Revenues over (under) expenditures (14,217) 97,774 (47,675) Other financing sources (uses) Transfers in - Transfers out Issuance of long-term debt Total other financing sources (uses) - Net change in fund balances (14,217) 97,774 (47,675) Fund balances (deficit), beginning of year 382 170,692 (419,931) 74,243 Fund balances (deficit), end of year $ 382 $ 156,475 $ (322,157) $ 26,568 148 Other Totals $ - $ 97,774 803,748 803,748 713 713 804,461 902,235 2,724,784 2,786,676 (1,920,323) (1,884,441) 2,847,400 2,847,400 (1,525,410) (1,525,410) 986,300 986,300 2,308,290 2,308,290 387,967 423,849 3,568,257 3,393,643 $ 3,956,224 $ 3,817,492 149 This page intentionally left blank. 150 CITY OF LANSING, MICHIGAN Nonmajor Permanent Funds Cemetery Perpetual Care Fund - This fund accounts for transfers from the Cemetery Fund, representing 15% of lot sales. These funds are invested, and all investment earnings are transferred to the Cemetery Fund for lot maintenance. Parks Trust Fund - This fund accounts for contributions made for City parks, the principal of which must be preserved in accordance with the trust indentures. Income derived from these contributions is transferred to the Parks Department special revenue fund. 151 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Permanent Funds June 30, 2014 Cemetery Perpetual Parks Care Trust Totals Assets Equity in pooled cash and investments $ 1,717,344 $ 1,251 $ 1,718,595 Fund balances Nonspendable $ 1,717,344 $ 1,251 $ 1,718,595 152 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Permanent Funds For the Year Ended June 30, 2014 Cemetery Perpetual Parks Care Trust Totals Revenues Interest $ 6,703 $ $ 6,703 Other financing sources (uses) Transfers in 15,650 15,650 Transfers out (6,703) (6,703) Total other financing sources (uses) 8,947 8,947 Net change in fund balances 15,650 15,650 Fund balances, beginning of year 1,701,694 1,251 1,702,945 Fund balances, end of year $ 1,717,344 $ 1,251 $ 1,718,595 153 This page intentionally left blank. 154 CITY OF LANSING, MICHIGAN Nonmajor Enterprise Funds Cemetery Fund - This fund accounts for the operation of City-owned cemeteries. Golf Fund - This fund accounts for the operation of the City-owned golf courses. Garbage and Rubbish Collection Fund - This fund accounts for the provision of household solid waste disposal services to participating residents of the City. Recycling Fund - This fund accounts for the provision of recycling services to participating residents of the City. 155 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2014 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Assets Current assets: Cash and cash equivalents $ 200 $ 300 $ - $ - $ 500 Equity in pooled cash and investments 137,341 104,155 105,815 1,474,802 1,822,113 Accounts receivable, net - 5,292 50,584 - 55,876 Inventories 58,839 6,214 23,125 - 88,178 Total current assets 196,380 115,961 179,524 1,474,802 1,966,667 Noncurrent assets: Capital assets not being depreciated 57,740 446,501 - - 504,241 Capital assets being depreciated, net 144,704 2,109,580 1,655,567 3,909,851 Total noncurrent assets 202,444 2,556,081 - 1,655,567 4,414,092 Total assets 398,824 2,672,042 179,524 3,130,369 6,380,759 Deferred outflows of resources Deferred refunding loss - 7,291 - - 7,291 Liabilities Current liabilities: Accounts payable 39,463 2,890 49,924 56,638 148,915 Deposits payable - - 4,140 - 4,140 Accrued interest payable - 610 - 8,174 8,784 Accrued payroll 1,015 15,441 - 16,456 Due to other funds - 5,271 - 5,271 Unearned revenues 39,870 67,677 - 107,547 Current portion of: Bonds and notes payable - 100,000 - 208,649 308,649 Total current liabilities 40,478 164,082 121,741 273,461 599,762 Noncurrent liabilities: Bonds and notes payable, net of current portion - 205,000 - 1,459,432 1,664,432 Compensated absences, net of current portion 31,884 57,956 49,870 103,827 243,537 Total noncurrent liabilities 31,884 262,956 49,870 1,563,259 1,907,969 Total liabilities 72,362 427,038 171,611 1,836,720 2,507,731 Net position Net investment in capital assets 202,444 2,258,372 - (12,514) 2,448,302 Unrestricted 124,018 (6,077) 7,913 1,306,163 1,432,017 Total net position $ 326,462 $ 2,252,295 $ 7,913 $ 1,293,649 $ 3,880,319 156 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Net Position Nonmajor Enterprise Funds For the Year Ended June 30, 2014 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Operating revenues Charges for services $ 289,565 $ 366,567 $ 1,664,201 $ 3,508,536 $ 5,828,869 Operating expenses Personal services 376,005 539,933 978,657 1,793,176 3,687,771 Purchase of goods and services 330,075 283,083 744,186 1,292,870 2,650,214 Depreciation 16,190 91,118 - 150,506 257,814 Total operating expenses 722,270 914,134 1,722,843 3,236,552 6,595,799 Operating income (loss) (432,705) (547,567) (58,642) 271,984 (766,930) Nonoperating expenses Interest revenue 9,520 - 9,520 Interest expense and fees (21,537) (27,001) (48,538) Total nonoperating revenues (expenses) (12,017) (27,001) (39,018) Income (loss) before transfers (432,705) (559,584) (58,642) 244,983 (805,948) Transfers in 458,103 563,184 - 1,021,287 Transfers out (15,650) - - (15,650) Change in net position 9,748 3,600 (58,642) 244,983 199,689 Net position, beginning of year, as restated 316,714 2,248,695 66,555 1,048,666 3,680,630 Net position, end of year $ 326,462 $ 2,252,295 $ 7,913 $ 1,293,649 $ 3,880,319 157 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2014 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Cash flows from operating activities Cash received from customers $ 289,565 $ 373,105 $ 1,687,783 $ 3,508,536 $ 5,858,989 Cash payments for goods and services (341,123) (358,223) (1,222,064) (1,273,719) (3,195,129) Cash payments to employees (373,902) (531,691) (975,528) (1,787,294) (3,668,415) Net cash provided by (used in) operating activities (425,460) (516,809) (509,809) 447,523 (1,004,555) Cash flows from noncapital financing activities Transfers in 458,103 563,184 - 1,021,287 Transfers out (15,650) - (15,650) Net cash provided by noncapital financing activities 442,453 563,184 1,005,637 Cash flows from capital and related financing activities Acquisition of capital assets - - (1,806,073) (1,806,073) Proceeds from issuance of long-term debt 1,737,700 1,737,700 Principal paid on long-term debt (100,000) (69,619) (169,619) Interest paid on long-term debt (19,240) (18,827) (38,067) Net cash used in capital and related financing activities (119,240) (156,819) (276,059) Cash flows from investing activities Interest and dividends received - 9,520 - 9,520 Net change in cash and cash equivalents 16,993 (63,345) (509,809) 290,704 (265,457) Cash and cash equivalents: Beginning of year 120,548 167,800 615,624 1,184,098 2,088,070 End of year $ 137,541 $ 104,455 $ 105,815 $ 1,474,802 $ 1,822,613 Reconciliation to statement of net position Cash and cash equivalents $ 200 $ 300 $ - $ - $ 500 Equity in pooled cash and investments 137,341 104,155 105,815 1,474,802 1,822,113 $ 137,541 $ 104,455 $ 105,815 $ 1,474,802 $ 1,822,613 continued... 158 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2014 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Reconciliation of operating income (loss) to net cash used in operating activities Operating loss $ (432,705) $ (547,567) $ (58,642) $ 271,984 $ (766,930) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation expense 16,190 91,118 150,506 257,814 Changes in operating assets and liabilities that provided (used) cash: Accounts receivable - (3,222) (9,271) - (12,493) Inventories 4,377 873 (6,252) - (1,002) Accounts payable (15,425) (6,013) 28,374 19,151 26,087 Deposits payable - - (270) - (270) Accrued payroll 288 1,777 - 2,065 Due to other funds - (70,000) (500,000) (570,000) Unearned revenues - 9,760 33,123 - 42,883 Compensated absences 1,815 6,465 3,129 5,882 17,291 Net cash provided by (used in) operating activities $ (425,460) $ (516,809) $ (509,809) $ 447,523 $ (1,004,555) concluded 159 This page intentionally left blank. 160 CITY OF LANSING, MICHIGAN Internal Service Funds Fleet Maintenance Fund - This fund accounts for the costs of maintaining the City's fleet of vehicles and heavy equipment. Fringe Benefits Fund - This fund accounts for the costs of the City's fringe benefits. Engineering Fund - This fund accounts for the operations of the City's engineering department. Information Technology Fund - This fund accounts for the operations of the City's information technology department. 161 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Internal Service Funds June 30, 2014 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Assets Current assets: Cash and cash equivalents $ 1,892,332 $ - $ - $ - $ 1,892,332 Equity in pooled cash and investments - 1,365,440 841,338 765,841 2,972,619 Accounts receivable, net - 425,199 - - 425,199 Inventories 472,528 - - 472,528 Prepaids - 470,513 79,700 - 550,213 Total current assets 2,364,860 2,261,152 921,038 765,841 6,312,891 Noncurrent assets: Capital assets not being depreciated 1,715,680 - - - 1,715,680 Capital assets being depreciated, net 9,914,060 1,697,196 11,611,256 Total noncurrent assets 11,629,740 - 1,697,196 - 13,326,936 Total assets 13,994,600 2,261,152 2,618,234 765,841 19,639,827 Deferred outflows of resources Deferred refunding loss - - 6,879 - 6,879 Liabilities Current liabilities: Accounts payable 152,021 816,123 1,461 538,089 1,507,694 Accrued interest payable 45,002 - 620 - 45,622 Accrued payroll 45,233 4,438 29,243 12,256 91,170 Claims incurred but not reported - 831,808 - - 831,808 Due to other funds 1,300,000 - 5,000 1,305,000 Negative equity in pooled cash 631,781 - 631,781 Current portion of: Bonds and notes payable 693,702 155,000 - 848,702 Compensated absences 2,246 - 70,326 31,564 104,136 Total current liabilities 2,869,985 1,652,369 261,650 581,909 5,365,913 Noncurrent liabilities: Bonds and notes payable, net of current portion 5,212,167 - 155,000 - 5,367,167 Compensated absences, net of current portion 233,124 38,460 332,178 109,075 712,837 Total noncurrent liabilities 5,445,291 38,460 487,178 109,075 6,080,004 Total liabilities 8,315,276 1,690,829 748,828 690y984 11,445,917 Net position Net investment in capital assets 5,723,871 - 1,394,075 - 7,117,946 Unrestricted (deficit) (44,547) 570,323 482,210 74,857 1,082,843 Total net position $ 5,679,324 $ 570,323 $ 1,876,285 $ 74,857 $ 8,200,789 162 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Position Internal Service Funds For the Year Ended June 30, 2014 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Operating revenues Charges for services $ 8,086,274 $ 60,104,365 $ 3,861,690 $ 3,080,000 $ 75,132,329 Operating expenses Personal services 3,359,959 260,570 2,711,922 1,423,888 7,756,339 Purchase of goods and services 4,774,634 59,301,275 888,020 1,581,255 66,545,184 Depreciation 1,436,632 - 45,431 - 1,482,063 Total operating expenses 9,571,225 59,561,845 3,645,373 3,005,143 75,783,586 Operating income (loss) (1,484,951) 542,520 216,317 74,857 (651,257) Nonoperating revenues (expenses) Gain on sale of capital assets 345,736 - - - 345,736 Interest expense and fees (190,714) 3,734 (186,980) Total nonoperating revenues (expenses) 155,022 - 3,734 - 158,756 Income (loss) before transfers (1,329,929) 542,520 220,051 74,857 (492,501) Transfers in 1,620,000 - - - 1,620,000 Change in net position 290,071 542,520 220,051 74,857 1,127,499 Net position, beginning of year, as restated 5,389,253 27,803 1,656,234 - 7,073,290 Net position, end of year $ 5,679,324 $ 570,323 $ 1,876,285 $ 74,857 $ 8,200,789 163 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2014 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Cash flows from operating activities Cash received from interfund services $ 8,086,274 $ 61,067,372 $ 3,861,690 $ 3,080,000 $ 76,095,336 Cash payments for goods and services (5,344,196) (59,497,718) (961,545) (1,043,166) (66,846,625) Cash payments to employees (3,306,885) (251,453) (2,771,203) (1,270,993) (7,600,534) Net cash provided by (used in) operating activities (564,807) 1,318,201 128,942 765,841 1,648,177 Cash flows from noncapital financing activities Transfers in 1,620,000 - - - 1,620,000 Cash flows from capital and related financing activities Proceeds on sale of capital assets 345,736 345,736 Acquisition and construction of capital assets (4,606,487) (4,606,487) Proceeds from issuance of long-term debt 1,550,855 1,550,855 Principal paid on long-term debt (575,835) (155,000) (730,835) Interest paid on long-term debt (162,211) (11,161) (173,372) Net cash used in capital and related financing activities (3,447,942) - (166,161) - (3,614,103) Net change in cash and cash equivalents (2,392,749) 1,318,201 (37,219) 765,841 (345,926) Cash and cash equivalents, beginning of year 3,653,300 47,239 878,557 - 4,579,096 Cash and cash equivalents, end of year $ 1,260,551 $ 1,365,440 $ 841,338 $ 765,841 $ 4,233,170 Reconciliation to statement of net position Cash and cash equivalents $ 1,892,332 $ - $ - $ - $ 1,892,332 Equity in pooled cash and investments - 1,365,440 841,338 765,841 2,972,619 Negative equity in pooled cash (631,781) - - - (631,781) $ 1,260,551 $ 1,365,440 $ 841,338 $ 765,841 $ 4,233,170 continued... 164 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2014 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Reconciliation of operating income (loss)to net cash provided by (used in) operating activities Operating income (loss) $ (1,484,951) $ 542,520 $ 216,317 $ 74,857 $ (651,257) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation expense 1,436,632 - 45,431 1,482,063 Change in operating assets and liabilities that provided (used) cash: Accounts receivable - 12,763 - 12,763 Due from other funds - 950,244 950,244 Inventories 371,190 - 371,190 Prepaids - (63,898) (79,700) - (143,598) Accounts payable (740,752) (132,545) 1,175 538,089 (334,033) Accrued payroll 7,454 977 5,921 12,256 26,608 Claims incurred but not reported reported - 17,794 - - 17,794 Due to other funds (200,000) - 5,000 - (195,000) Compensated absences 45,620 (9,654) (65,202) 140,639 111,403 Net cash provided by (used in) operating activities $ (564,807) $ 1,318,201 $ 128,942 $ 765,841 $ 1,648,177 concluded 165 This page intentionally left blank. 166 CITY OF LANSING, MICHIGAN Agency Funds Bail Bonds Fund - This fund is used to hold cash received by the District Court for bail bonds. Garnishment, Indemnity Bond and Restitution Fund - This fund is used to hold cash received by the District Court for garnishment payments until claimed, and to hold indemnity bonds deposited relating to civil disputes until the Court rules on the case. 167 CITY OF LANSING, MICHIGAN Combining Statement of Fiduciary Assets and Liabilities Agency Funds June 30, 2014 54-A District Court Garnishment, Bail Indemnity Bond Bonds and Restitution Totals Assets Equity in pooled cash and investments $ 59,903 $ 31,507 $ 91,410 Liabilities Undistributed receipts $ 59,903 $ 31,507 $ 91,410 168 CITY OF LANSING, MICHIGAN Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds For the Year Ended June 30, 2014 Beginning Ending Balance Additions Deletions Balance 54-A District Court - Bail Bonds Assets Equity in pooled cash and investments $ 63,131 $ 431,964 $ 435,192 $ 59,903 Liabilities Undistributed receipts $ 63,131 $ 431,964 $ 435,192 $ 59,903 54-A District Court - Garnishment, Indemnity Bond and Restitution Assets Equity in pooled cash and investments $ 31,395 $ 290,042 $ 289,930 $ 31,507 Liabilities Undistributed receipts $ 31,395 $ 290,042 $ 289,930 $ 31,507 Total - all agency funds Assets Equity in pooled cash and investments $ 94,526 $ 722,006 $ 725,122 $ 91,410 Liabilities Undistributed receipts $ 94,526 $ 722,006 $ 725,122 $ 91,410 169 This page intentionally left blank. 170 STATISTICAL SECTION 171 This page intentionally left blank. 172 CITY OF LANSING, MICHIGAN Statistical Section Table of Contents This part of the City of Lansing, Michigan's (the "City") comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Page Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. 175 Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property taxes. 180 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 184 Demographic and These schedules offer demographic and economic indicators to Economic Information help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. 189 Operating Information These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs. 191 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 173 This page intentionally left blank. 174 CITY OF LANSING, MICHIGAN Table 1 -Unaudited Net Assets/Net Position by Component Last Ten Fiscal Years 1 2014----L 2010 0 2008 1 (2) Governmental activities Net investment in capital assets $ 150,976,010 $ 154,372,604 $ 163,723,249 $ 180,571,237 $ 186,536,428 $ 191,516,475 $ 187,054,852 $ 184,150,439 $ 190,243,447 $ 198,338,788 Restricted 13,133,137 12,552,011 14,524,584 14,777,571 14,304,689 17,139,090 34,554,539 37,642,784 36,706,345 33,900,657 Unrestricted (46,344,555) (39,467,672) (34,371,855) (18,840,717) (7,649,432) 6,589,790 (3,124,027) 2,776,006 514,601 1,632,040 Total governmental activities net assets/ net position $ 117,764,592 $ 127,456,943 $ 143,875,978 $ 176,508,091 $ 193,191,685 $ 215,245,355 $ 218,485,364 $ 224,569,229 $ 227,464,393 $ 233,871,485 Business-type activities Net investment in capital assets $ 214,458,841 $ 212,682,278 $ 209,584,457 $ 204,149,751 $ 194,854,140 $ 185,430,669 $ 178,526,049 $ 166,320,408 $ 161,324,071 $ 163,834,290 Restricted 8,746,096 11,077,134 12,382,060 13,080,302 19,917,341 19,454,812 30,892,739 35,777,715 35,945,848 39,493,526 Unrestricted 37,891,053 31,943,581 32,196,598 34,177,453 30,193,568 23,730,694 16,330,517 28,929,677 28,208,193 22,701,430 Total business-type activities net assets/ net position $ 261,095,990 $ 255,702,993 $ 254,163,115 $ 251,407,506 $ 244,965,049 $ 228,616,175 $ 225,749,305 $ 231,027,800 $ 225,478,112 $ 226,029,246 Primary government Net investment in capital assets $ 365,434,851 $ 367,054,882 $ 373,307,706 $ 384,720,988 $ 381,390,568 $ 376,947,144 $ 365,580,901 $ 350,470,847 $ 351,567,518 $ 362,173,078 Restricted 21,879,233 23,629,145 26,906,644 27,857,873 34,222,030 36,593,902 65,447,278 73,420,499 72,652,193 73,394,183 Unrestricted(deficit) (8,453,502) (7,524,091) (2,175,257) 15,336,736 22,544,136 30,320,484 13,206,490 31,705,683 28,722,794 24,333,470 Total primary government net assets/ net position $ 378,860,582 $ 383,159,936 $ 398,039,093 $ 427,915,597 $ 438,156,734 $ 443,861,530 $ 444,234,669 $ 455,597,029 $ 452,942,505 $ 459,900,731 (1)no discretely presented component units shown (2)in 2005 the City's definition of'restricted net assets"was changed to include assets in funds set up to account for activities outside of the General Fund,for Governmental Activities,and to include restricted cash for debt retirement for Business-type Activities. 175 CITY OF LANSING, MICHIGAN Table 2-Unaudited Change in Net Assets/Net Position Last Ten Fiscal Years ---------- Expenses Governmental activities: General government $ 24,771,054 $ 27,438,065 $ 30,841,776 $ 25,665,269 $ 30,326,671 $ 26,426,242 $ 28,901,548 $ 22,043,283 $ 34,375,762 $ 53,533,838 Public safety 78,142,897 77,133,469 82,369,004 83,546,997 84,566,215 71,236,947 76,211,756 62,570,888 60,047,271 38,668,349 Public works 37,243,516 29,984,955 33,144,303 26,355,375 29,252,516 37,588,680 40,032,746 40,517,063 31,790,944 30,670,483 Recreation and culture 8,670,918 7,713,098 8,889,142 8,245,451 7,312,480 7,298,385 7,677,083 6,198,462 7,881,212 5,464,143 Community development 7,602,229 16,939,572 13,623,946 12,825,028 9,715,087 6,378,286 6,382,336 6,232,406 7,124,491 6,996,000 Interest on long-term debt 1,340,818 1,475,051 1,949,825 2,116,535 2,229,288 1,803,125 1,481,658 1,658,708 1,197,851 1,033,078 Total governmental activities expenses 157,771,432 160,684,210 170,817,996 158,754,655 163,402,257 150,731,665 160,687,127 139,220,810 142,417,531 136,365,891 Business-type activities: Sewage disposal system 28,682,809 26,298,964 26,836,597 26,444,741 24,931,075 26,247,188 27,382,736 24,725,229 21,706,537 20,631,611 Municipal parking system 7,851,702 8,108,373 9,491,376 9,896,498 8,305,095 8,353,063 10,188,065 10,275,379 18,403,163 10,151,018 Cemetery 722,270 633,050 639,000 755,766 659,584 689,979 675,672 692,510 753,151 802,949 Golf 935,671 892,117 810,372 846,817 869,003 927,200 1,072,505 1,358,008 1,398,963 1,446,615 Garbage and rubbish collection 1,722,843 1,557,708 1,558,024 1,515,600 1,451,059 1,547,372 1,436,642 1,372,266 1,412,620 1,421,617 Recycling 3,263,553 3,650,292 3,041,328 2,809,353 2,804,047 3,008,750 2,940,366 2,777,068 2,981,730 2,862,003 Potter Park Zoo - - - - - - (156,270) 2,968,236 2,718,759 2,690,943 Total business-type activities expenses 43,178,848 41,140,504 42,376,697 42,268,775 39,019,863 40,773,552 43,539,716 44,168,696 49,374,923 40,006,756 Total primary government expenses $ 200,950,280 $ 201,824,714 $ 213,194,693 $ 201,023,430 $ 202,422,120 $ 191,505,217 $ 204,226,843 $ 183,389,506 $ 191,792,454 $ 176,372,647 Program revenues Governmental activities: Charges for services: General government $ 6,820,261 $ 6,162,713 $ 6,428,110 $ 6,742,306 $ 6,565,263 $ 5,188,510 $ 5,938,911 $ 6,251,032 $ 6,416,850 $ 6,264,142 Public safety 2,122,023 4,083,222 8,525,524 8,975,173 8,589,146 9,817,421 12,705,181 13,014,934 13,087,372 12,400,853 Public works 2,129,126 1,622,738 2,797,443 2,449,606 2,788,112 4,565,013 4,364,525 3,805,739 3,891,646 2,646,007 Recreation and culture 800,293 594,349 557,609 685,120 587,906 1,217,445 1,556,260 1,259,373 1,405,584 1,598,968 Community development 67,323 67,349 67,344 122,326 69,250 50,132 66,308 66,161 66,486 66,788 Operating grants and contributions 28,234,803 29,322,435 31,928,983 30,154,681 27,515,892 26,462,211 20,356,292 16,524,178 16,158,496 16,673,481 Capital grants and contributions 3,365,682 3,124,288 260,656 189,414 3,109,410 2,571,741 2,531,974 2,179,870 3,659,169 3,479,536 Total governmental activities program revenues 43,539,511 44,977,094 50,565,669 49,318,626 49,224,979 49,872,473 47,519,451 43,101,287 44,685,603 43,129,775 Business-type activities: Charges for services: Sewage disposal system 31,759,698 30,825,174 29,915,799 29,205,945 28,907,772 27,446,304 28,023,322 26,926,202 26,867,610 26,890,756 Municipal parking system 7,453,476 5,267,627 6,858,606 7,539,179 7,396,219 7,539,611 10,090,566 10,838,270 10,289,830 9,628,690 Cemetery 289,565 314,913 240,394 225,947 226,973 248,314 218,688 264,255 237,564 230,716 Golf 366,567 373,000 390,134 382,546 438,315 448,067 607,922 754,995 890,190 929,266 Garbage and rubbish collection 1,664,201 1,131,659 1,459,101 1,507,577 1,677,428 1,486,531 1,617,717 1,378,562 1,295,053 1,322,111 Recycling 3,508,536 3,434,622 2,818,364 2,609,423 2,651,309 2,945,061 3,039,089 2,903,092 2,816,277 2,636,002 Potter Park Zoo - - - - - - (115) 553,999 471,703 558,654 Operating grants and contributions 2,574,949 1,193,571 1,331,737 4,456,708 1,535,907 1,541,913 - - - - Capital grants and contributions - - 2,683,657 1,439,044 11,928,108 60,318 196,317 183,012 1,368,773 731,575 Total business-type activities program revenues 47,616,992 42,540,566 45,697,792 47,366,369 54,762,031 41,716,119 43,793,506 43,802,387 44,237,000 42,927,770 Total primary government program revenues $ 91,156,503 $ 87,517,660 $ 96,263,461 $ 96,684,995 $ 103,987,010 $ 91,588,592 $ 91,312,957 $ 86,903,674 $ 88,922,603 $ 86,057,545 Net(expenses)revenues Governmental activities $(114,231,921) $(115,707,116) $(120,252,327) $(109,436,029) $(114,177,278) $(100,859,192) $(113,167,676) $ (96,119,523) $ (97,731,928) $ (93,236,116) Business-type activities 4,438,144 1,400,062 3,321,095 5,097,594 15,742,168 942,567 253,790 (366,309) (5,137,923) 2,921,014 Total primary government net expense $(109,793,777) $(114,307,054) $(116,931,232) $(104,338,435) $ (98,435,110) $ (99,916,625) $(112,913,886) $ (96,485,832) $(102,869,851) $ (90,315,102) continued... 176 CITY OF LANSING, MICHIGAN Change in Net Assets/Net Position Last Ten Fiscal Years ---------- General revenues and other changes in net assets/net position Governmental activities: Taxes: Property taxes $ 38,079,548 $ 38,668,837 $ 33,506,860 $ 37,233,590 $ 39,010,960 $ 39,141,928 $ 38,607,761 $ 38,371,105 $ 37,506,017 $ 36,181,408 Income taxes 31,450,913 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 31,168,012 28,209,913 27,032,176 27,435,047 Unrestricted grants and contributions 35,677,910 31,425,718 26,441,961 27,254,574 25,847,423 27,318,313 28,180,799 27,258,536 26,817,633 26,355,710 Investment earnings 36,836 58,588 69,265 89,735 246,495 978,034 1,706,572 2,483,162 1,634,608 715,608 Miscellaneous - - 123,066 108,601 75,094 32,310 - - 774,822 104,563 Transfers (705,637) (583,117) (464,008) (633,814) (464,807) (509,728) 7,420,667 (3,098,357) (3,132,465) (2,123,435) Total governmental activities 104,539,570 99,420,781 87,620,214 92,752,435 92,123,608 96,273,619 107,083,811 93,224,359 90,632,791 88,668,901 Business-type activities: Investment earnings 246,616 356,467 271,067 689,883 141,899 413,850 1,883,034 2,815,480 1,453,076 1,298,407 Miscellaneous 2,600 - (1,300,561) 21,166 - 725 5,348 2,160 1,248 23,736 Transfers 705,637 583,117 464,008 633,814 464,807 509,728 (7,420,667) 3,098,357 3,132,465 2,123,435 Total business-type activities 954,853 939,584 (565,486) 1,344,863 606,706 924,303 (5,532,285) 5,915,997 4,586,789 3,445,578 Total primary government $ 105,494,423 $ 100,360,365 $ 87,054,728 $ 94,097,298 $ 92,730,314 $ 97,197,922 $ 101,551,526 $ 99,140,356 $ 95,219,580 $ 92,114,479 Changes in net assets/net position Governmental activities $ (9,692,351) $ (16,286,335) $ (32,632,113) $ (16,683,594) $ (22,053,670) $ (4,585,573) $ (6,083,865) $ (2,895,164) $ (7,099,137) $ (4,567,215) Business-type activities 5,392,997 2,339,646 2,755,609 6,442,457 16,348,874 1,866,870 (5,278,495) 5,549,688 (551,134) 6,366,592 Total primary government $ (4,299,354) $ (13,946,689) $ (29,876,504) $ (10,241,137) $ (5,704,796) $ (2,718,703) $ (11,362,360) $ 2,654,524 $ (7,650,271) $ 1,799,377 concluded (1)No discretely presented component units shown 177 CITY OF LANSING, MICHIGAN Table 3-Unaudited Fund Balances, Governmental Funds Last Ten Fiscal Years 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 (2) (1) General fund Nonspendable $ 79,770 $ 75,738 $ 92,538 $ 171,586 $ $ $ $ $ $ Restricted 36,854 9,400 16,256 41,129 Committed 2,038,608 2,976,408 65,373 178,081 Unassigned 7,052,830 5,633,528 5,198,032 4,939,691 - Reserved - - - - 102,732 1,320,375 1,765,288 1,848,021 2,443,224 2,482,589 Unreserved - - - - 389,061 3,755,862 5,465,164 5,036,129 4,634,961 4,709,909 Total general fund 9,208,062 8,695,074 5,372,199 5,330,487 491,793 5,076,237 7,230,452 6,884,150 7,078,185 7,192,498 All other governmental funds Nonspendable 2,551,975 2,671,151 2,852,004 3,006,507 - - - - - - Restricted 6,902,928 4,368,983 5,566,421 7,412,008 Committed 4,623,112 4,035,145 4,109,131 4,908,740 Unassigned(deficit) (522,157) (619,931) (543,774) (371,285) - - - - - - Reserved 1,177,998 324,366 365,351 2,544,339 613,533 2,139,438 Unreserved,reported in: Special revenue funds 12,029,680 13,394,485 14,716,755 14,523,146 18,798,291 17,635,170 Capital projects funds 11,614,644 12,010,219 17,862,441 18,978,360 15,717,371 12,563,759 Debt service funds 126,434 186,636 256,144 144,518 88,826 4,400 Permanent funds 1,649,550 1,630,098 1,609,992 1,596,939 1,577,150 1,557,890 Total all other governmental funds 13,555,858 10,455,348 11,983,782 14,955,970 26,598,306 27,545,804 34,810,683 37,787,302 36,795,171 33,900,657 Total all governmental funds $ 22,763,920 $ 19,150,422 $ 17,355,981 $ 20,286,457 $ 27,090,099 $ 32,622,041 $ 42,041,135 $ 44,671,452 $ 43,873,356 $ 41,093,155 (1)In 2005 the City's definition for Permanent Funds fund balance changed to"unreserved"due to the nature of the funds being set up as a reserved fund (2)The City implemented GASB 54 for the Fiscal Year Ended June 30,2011. Prior years were not restated retroactively. 178 CITY OF LANSING, MICHIGAN Table 4-Unaudited Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years 2014 -----�` -- Revenues Property taxes $ 38,151,162 $ 38,717,552 $ 33,583,448 $ 37,371,885 $ 39,279,343 $ 39,258,893 $ 38,775,722 $ 38,681,928 $ 37,957,773 $ 36,527,417 Income taxes 31,450,913 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 31,168,012 28,209,913 27,032,176 27,497,542 Licenses and permits 1,508,133 1,509,402 1,538,325 1,598,804 1,414,906 1,325,119 1,429,075 1,101,550 860,647 791,655 Intergovernmental 41,658,435 40,639,183 41,431,793 40,304,785 39,137,217 38,998,039 38,556,616 34,699,908 34,964,225 35,624,372 Charges for services 13,037,014 11,754,381 18,676,398 18,606,304 18,323,158 20,355,642 19,116,593 18,415,612 19,436,267 17,931,572 Fines and forfeits 2,738,392 3,694,351 2,884,328 3,325,728 4,579,175 4,143,000 4,090,397 4,349,642 4,515,951 4,351,977 Interest and rents 56,550 53,179 63,571 88,516 249,464 1,196,559 1,836,485 2,607,388 1,710,674 720,707 Contributions 20,725,882 16,247,403 12,369,733 11,821,388 10,606,368 10,372,056 10,894,573 9,980,854 9,385,831 8,966,289 Donations from private sources - - 5,000 - 9,000 44,000 326,768 114,954 549,055 126,182 Otherrevenue 653,506 510,515 400,074 504,856 473,123 1,054,209 331,248 1,019,476 1,082,283 1,320,064 Total revenues 149,979,987 142,976,721 138,895,740 142,322,015 141,480,197 146,060,279 146,525,489 139,181,225 137,494,882 133,857,777 Expenditures General government 21,063,589 23,595,321 25,038,589 26,396,516 27,839,564 28,951,805 29,209,458 28,905,058 34,956,037 55,746,807 Public safety 72,068,298 63,943,082 66,161,872 70,397,235 70,820,184 70,082,462 67,715,160 65,218,515 59,143,629 38,121,596 Public works 13,456,773 8,908,673 6,225,177 6,002,823 Highways and streets 10,496,880 9,937,423 8,589,298 8,494,233 14,506,982 14,723,311 14,860,390 13,501,747 10,879,004 10,467,860 Recreation and culture 8,457,444 6,629,453 6,996,562 7,464,193 8,127,700 8,452,768 8,038,290 7,676,600 7,509,183 5,517,980 Community development 3,646,035 - - - - - - - - - Other functions 2,620,316 23,699,202 17,999,264 15,675,003 15,182,675 12,599,072 11,805,843 9,847,925 8,259,415 8,520,848 Capital outlay 8,715,193 5,489,617 6,466,084 9,956,103 14,781,728 14,855,863 16,228,127 20,001,659 13,306,810 12,614,723 Debt service: Interest 1,185,257 1,378,856 1,836,218 3,210,220 3,270,068 1,801,394 1,607,703 1,285,436 1,145,588 1,187,673 Principal 3,485,104 3,137,159 3,448,080 2,070,552 2,165,237 4,743,146 4,721,581 3,875,909 3,244,879 3,592,766 Issuance costs - 42,744 - 48,804 - - - - - - Total expenditures 145,194,889 146,761,530 142,761,144 149,715,682 156,694,138 156,209,821 154,186,552 150,312,849 138,444,545 135,770,253 Excess of revenues over under expenditures 4,785,098 (3,784,809) (3,865,404) (7,393,667) (15,213,941) (10,149,542) (7,661,063) (11,131,624) (949,663) (1,912,476) Other financing sources(uses) Proceeds from borrowing 986,300 11,932,046 - 2,470,000 10,146,117 - 4,052,979 15,190,077 6,087,507 1,784,465 Proceeds from sale of capital assets 167,737 497,833 1,398,936 1,210,046 689 1,587,216 - - 774,822 74,565 Payment to escrow agent - (6,015,112) - (2,456,207) - - - - Insurance proceeds - - - - - 120,960 - - - - Transfers in 10,522,162 7,056,932 7,893,879 9,602,095 16,181,590 11,601,871 13,507,521 6,908,259 8,170,998 8,274,929 Transfers out (12,847,799) (1,892,449) (8,357,887) (10,235,909) (16,646,397) (12,579,599) (12,529,754) (10,168,616) (11,303,463) (10,398,364) Total other financing sources(uses) (1,171,600) 11,579,250 934,928 590,025 9,681,999 730,448 5,030,746 11,929,720 3,729,864 (264,405) Net change in fund balance $ 3,613,498 $ 7,794,441 $ (2,930,476) $ (6,803,642) $ (5,531,942) $ (9,419,094) $ (2,630,317) $ 798,096 $ 2,780,201 $ (2,176,881) Debt service as a percentage of noncapital expenditures 3.4% 3.2% 3.8% 3.7% 3.9% 4.5% 4.6% 4.0% 3.4% 3.8% 179 CITY OF LANSING, MICHIGAN Table 5 - Unaudited Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (rate per $1,000 of assessed value) Fiscal Total Assessed Year Personal Total Taxable Direct Estimated Value as a Ended Residential Commercial Industrial Agricultural Developmental Property Assessed Tax Actual Percentage of June 30, Property Property Property Property Property Valuation Valuation Rate Value Actual Value 2005 $ 1,196,695,728 $702,969,958 $ 175,906,035 $ $ $ 288,421,700 $2,363,993,421 15.88 $4,727,986,842 50.0% 2006 1,266,935,505 730,413,466 180,564,805 251,293,200 2,429,206,976 15.88 4,858,413,952 50.0% 2007 1,354,989,247 728,343,561 195,703,073 221,858,408 2,500,894,289 15.88 5,001,788,578 50.0% 2008 1,437,051,392 765,233,437 192,915,386 223,995,750 2,619,195,965 15.83 5,238,391,930 50.0% 2009 1,479,089,611 719,463,319 254,539,254 205,034,000 2,658,126,184 15.83 5,316,252,368 50.0% 2010 1,480,467,389 713,807,797 248,288,931 220,228,175 2,662,792,292 15.70 5,325,584,584 50.0% 2011 1,407,920,589 624,406,132 215,099,428 199,543,400 2,446,969,549 15.70 4,893,939,098 50.0% 2012 1,387,390,250 639,535,400 87,432,000 183,233,681 2,297,591,331 15.70 4,595,182,662 50.0% 2013 1,232,109,181 587,002,900 86,884,400 151,900 182,543,900 2,088,692,281 19.70 4,177,384,562 50.0% 2014 1,152,931,800 580,539,700 85,938,200 151,900 2,900 182,024,000 2,001,408,500 19.70 4,002,817,000 50.0% Source: Lansing City Assessor 180 CITY OF LANSING, MICHIGAN Table 6- Unaudited Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per$1,000 of assessed value) Fiscal City Direct Rates Overlapping Rates Year Ended Tax Operating Service City County School State College Other June 30, Year Millage Millage Millage Millage Millage Education Millage Millage Total (1) (2) 2005 2004 14.90 .98 15.88 8.10 20.65 6.00 3.84 8.83 63.30 2006 2005 14.90 .98 15.88 8.18 20.40 6.00 3.81 8.78 63.04 2007 2006 14.95 .93 15.88 8.72 20.32 6.00 3.81 9.15 63.88 2008 2007 14.95 .88 15.83 8.73 20.18 6.00 3.81 8.15 62.70 2009 2008 15.01 .82 15.83 8.87 20.15 6.00 3.81 9.04 63.70 2010 2009 15.44 .26 15.70 8.85 19.95 6.00 3.81 9.93 64.24 2011 2010 15.44 .26 15.70 8.84 19.95 6.00 3.81 9.93 64.23 2012 2011 15.44 .26 15.70 8.85 21.44 6.00 3.81 9.96 65.76 2013 2012 19.44 .26 19.70 9.49 21.73 6.00 3.81 9.96 70.68 2014 2013 19.44 .26 19.70 9.50 21.91 6.00 3.81 9.96 70.88 (1)rates for Lansing School District only (2)includes Intermediate School,Airport Authority, Capital Area Transit Authority and Capital Area District Library. Source: Lansing City Treasurer 181 CITY OF LANSING, MICHIGAN Table 7-Unaudited Profile of Ten Largest Ad Valorem Taxpayers Current Year and Nine Years Ago 2014 2005 Percentage Percentage Taxable of Total Total of Total Assessed Assessed Assessed Assessed Taxpayer Valuation Rank Valuation Valuation Rank Valuation General Motors Corp. $81,468,000 1 4.01% $ 205,695,700 1 6.79% Jackson National Life Insurance Company 32,771,500 2 1.61% 32,974,000 2 1.09% Consumers Energy 22,283,300 3 1.10% 22,446,500 5 0.74% Demmer Corporation 14,898,600 4 0.73% Comcast of Michigan LLC 11,644,000 5 0.57% Lansing Retail Center LLC 10,661,000 6 0.52% 16,317,300 6 0.54% Heart of the City Assoc 7,271,400 7 0.36% 11,274,600 10 0.37% Sprint Spectrum L.P. 9,496,000 8 0.47% 14,089,100 8 0.47% Emergent Biodefense Operations 6,881,400 9 0.34% Quality Dairy Co#17 6,759,700 10 0.33% Accident Fund Company 14,265,700 7 0.47% 525 Redevco Inc 27,168,700 3 0.90% Capital Outlook LLC 23,943,900 4 0.79% Cricket Communications 13,198,200 9 0.44% Data furnished from City of Lansing Assessor 182 CITY OF LANSING, MICHIGAN Table 8 - Unaudited Property Tax Levies and Collections Last Ten Fiscal Years Collected within the Fiscal Year of the Levy Total Collections to Date Fiscal Year Taxes Levied Current Percent of Delinquent Total Collections Ended for the Tax Levy Tax Tax as Percent June 30, Fiscal Year Collection Collected Collection Collection of Levy 2005 $ 40,051,303 $ 39,429,093 98.45% $ 140,123 $ 39,569,216 98.80% 2006 41,261,397 41,022,735 99.42% 83,419 41,106,154 99.62% 2007 42,627,042 42,516,696 99.74% 107,322 42,624,018 99.99% 2008 44,286,657 44,125,517 99.64% 144,587 44,270,104 99.96% 2009 45,567,556 45,468,639 99.78% 72,779 45,541,418 99.94% 2010 44,997,919 44,844,495 99.66% 33,012 44,877,507 99.73% 2011 41,460,916 41,375,354 99.79% 24,416 41,399,770 99.85% 2012 39,948,762 39,863,393 99.79% 19,647 39,883,040 99.84% 2013 40,450,767 39,716,932 98.19% 55,532 39,772,464 98.32% 2014 39,336,952 39,238,902 99.75% 20,866 39,259,768 99.80% Note: Amounts are net of chargebacks from the County Tax Revolving Funds for taxes still delinquent after three years. Note: Delinquent Tax Collection represents amounts received in the indicated fiscal year. Source: City of Lansing Treasurer 183 CITY OF LANSING, MICHIGAN Table 9-Unaudited Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-Type Activities _ General e Special Installment General Total Percentage >; Fiscal Obligation Assessment Purchase Obligation Revenue Lease Primary of Personal Per Year Bonds I Debt Agreements I Bonds Bonds 0 Purchases Government Income (2)2005 $ 13,320,000 $ 35,000 $ 8,396,154 $ 1,543,195 $ 151,841,661 $ 52,604,302 $ $ 4,180,000 $ 231,920,312 10.88%11) $ 1,947 119,100 (2)2006 17,255,582 25,000 7,351,126 1,409,844 158,320,227 48,772,782 4,180,000 237,314,561 11.14%(Z) 1,993 119,100 (2)2007 20,128,052 10,000 15,721,844 1,772,049 156,536,857 44,787,045 4,180,000 243,135,848 11.42%11) 2,041 119,100 (2)2008 20,914,466 - 14,037,885 1,534,822 175,578,524 41,921,307 4,180,000 258,167,004 12.13%(Z) 2,168 119,100 (3)2009 17,899,203 12,394,082 1,290,479 189,210,199 39,045,570 4,180,000 264,019,533 12.41%11) 2,217 119,100 (3)2010 26,329,157 10,925,689 1,038,804 199,063,758 36,122,872 4,180,000 277,660,281 13.05%�Z� 2,331 119,100 (3)2011 27,804,224 9,564,693 779,580 197,000,901 33,209,092 1,574,209 269,932,699 12.17% 2,362 114,297 (3)2012 25,816,914 8,193,615 512,577 189,536,530 30,135,311 1,637,177 255,832,124 11.32% 2,238 114,297 (3)2013 29,994,604 2,807,838 6,246,743 180,359,931 27,528,327 1,702,664 248,640,107 11.010) 2,175 114,298 (3)2014 27,180,294 3,100,563 7,062,234 174,471,861 24,055,438 1,668,081 - 237,538,471 10.69% 2,078 114,298 (1)population per decennial census by the U.S.Census Bureau (2)personal income data comes from U.S.Census Bureau,American Community Survey 2005 (3)personal income data comes from U.S.Census Bureau,American Community Survey 2009 184 CITY OF LANSING, MICHIGAN Table 10 - Unaudited Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Ratio of Fiscal Debt Net Bonded Net Year Service Debt Payable Debt to Bonded Ended Taxable Gross Bonded Monies From Restricted Net Bonded Taxable Debt per June 30, Population(') Value(3) Debt"' Available Revenues Debt Value Capita 2005 119,128 $ 2,363,993,421 $ 165,196,661 $ 4,400 $ 151,841,661 $ 13,350,600 0.0056 112 2006 119,128 2,429,206,976 175,600,809 88,826 159,920,227 15,591,756 0.0064 131 2007 119,128 2,500,894,289 176,674,909 309,363 162,596,857 13,768,689 0.0055 116 2008 119,128 2,619,195,965 196,492,990 256,144 184,442,624 11,794,222 0.0045 99 2009 119,128 2,658,126,184 207,109,402 186,636 197,225,199 9,697,567 0.0036 81 2010 119,128 2,662,792,292 225,392,915 126,434 206,198,758 19,067,723 0.0072 160 2011 114,297 2,446,969,549 224,805,125 46,029 203,225,901 21,533,195 0.0088 188 2012 114,297 2,297,591,331 215,353,444 - 194,911,530 20,441,914 0.0089 179 2013 114,297 2,088,692,281 210,354,535 178 184,849,931 25,504,426 0.0122 223 2014 114,297 2,001,408,500 201,652,155 - 178,031,861 23,620,294 0.0118 207 Source:2000 and 2010 Census by the U.S. Census Bureau includes all general obligation debt and special assessment debt with governmental obligation (3) the tax assessment day is December 31 prior to beginning of fiscal year 185 CITY OF LANSING, MICHIGAN Table 11 - Unaudited Direct and Overlapping Governmental Activities Debt As of June 30, 2014 Net General Obligation Amount Name of Debt %Applicable Applicable Governmental Unit Outstanding to City to City Net direct - City $ 37,343,091 100.00% $ 37,343,091 Share of County-issued bonds Joint Building Authority $ 3,042,527 100.00% $ 3,042,527 Drain Commission 144,462 100.00% 144,462 $ 3,186,989 Overlapping debt Eaton Intermediate School District 925,000 0.55% $ 5,088 Ingham Intermediate School District 2,002,000 23.31% 466,666 Waverly School District 36,730,000 0.23% 84,479 Lansing School District 43,525,000 81.35% 35,407,588 East Lansing School District 53,448,659 3.73% 1,993,635 Holt School District 75,456,667 2.46% 1,856,234 Ingham County 38,691,853 27.08% 10,477,754 Eaton County 38,691,853 1.63% 632,134 Clinton County 6,260,258 0.29% 18,155 Lansing Community College 77,855,000 19.27% 15,002,659 Okemos School District 20,656,000 2.32% 479,219 Mason School District 15,315,000 0.10% 15,315 Grand Ledge School District 58,635,000 1.18% 691,893 Total overlapping debt 67,130,819 Total direct and overlapping debt $ 107,660,899 Note: Overlapping debt percentages are apportioned based upon relative assessed values. Source: Municipal Advisory Council of Michigan 186 CITY OF LANSING, MICHIGAN Table 12-Unaudited Legal Debt Margin Information - Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2014 Assessed value,real and personal property $2,001,408,500 Assessed value equivalents 49,981,485 Total valuation 2,051,389,985 Legal debt margin Debt limitation- 10 percent of total valuation 205,138,999 Debt applicable to limit Total City Bonded Debt 223,943,286 City Share: Drain Commission-County Issued 144,162 Joint Building Authority-County Issued 3,042,527 TIF Supported Bonds 17,074,155 244,204,130 Less: Michigan Transportation(MTF)Bonds (3,560,000) Sewage Disposal Revenue Bonds (21,765,000) Pollution Abatement(CSO Project)Bonds (125,816,595) (151,141,595) Total net debt applicable to limit 93,062,535 Legal debt margin $ 112,076,464 ---------- Debt limit $ 302,811,105 $ 314,307,611 $ 324,987,531 $ 318,810,868 $ 298,581,799 $ 298,052,683 $ 268,975,768 $ 233,669,637 $ 208,869,228 $ 205,138,999 Total net debt applicable to limit 75,882,359 103,095,986 84,276,312 87,966,365 79,513,756 98,368,804 100,923,863 92,357,575 91,833,157 93,062,835 Legal debt margin $ 226,928,746 $ 211,211,625 $ 240,711,219 $ 230,844,503 $ 219,068,043 $ 199,683,880 $ 168,051,905 $ 141,312,062 $ 117,036,071 $ 112,076,164 Total net debt applicable to the limit as a percentage of debt limit 25.06% 32.80% 25.93% 27.59% 26.63% 33.00% 37.52% 39.52% 43.97% 45.37% 187 CITY OF LANSING, MICHIGAN Table 13 - Unaudited Pledged-Revenue Coverage Last Ten Fiscal Years Sewage Disposal Bonds Direct Net Revenue Gross Operating Available for Debt Service Requirements Revenue Expenses(') Debt Service Principal Interest Total Coverage(2) 2005 $ 26,601,646 $ 12,775,001 $ 13,826,645 $ 3,715,000 $ 1,786,328 $ 5,501,328 2.51 2006 27,932,464 12,867,761 15,064,703 3,805,000 2,036,736 5,841,736 2.58 2007 29,292,698 13,494,658 15,798,040 3,950,000 2,152,990 6,102,990 2.59 2008 29,356,299 15,997,449 13,358,850 2,830,000 2,002,400 4,832,400 2.76 2009 27,759,684 14,206,961 13,552,723 2,840,000 1,900,000 4,740,000 2.86 2010 28,613,004 12,358,472 16,254,532 2,840,000 1,803,425 4,643,425 3.50 2011 29,865,648 12,616,100 17,249,548 2,925,000 1,621,221 4,546,221 3.79 2012 30,178,511 12,562,663 17,615,848 3,040,000 1,448,856 4,488,856 3.92 2013 31,169,428 12,112,994 19,056,434 3,160,000 1,111,390 4,271,390 4.46 2014 31,996,794 13,424,901 18,571,893 3,265,000 1,054,878 4,319,878 4.30 Operating expenses less depreciation Coverage is defined as net revenue available for debt service divided by debt service requirements 188 CITY OF LANSING, MICHIGAN Table 14- Unaudited Demographic and Economic Statistics Last Ten Fiscal Years Per capita Lansing School Personal Personal Median District Unemployment Labor Year Population(') Income Income(z) Age(3) Enrollment(4) %Rate(5) Force(5) 2005 119,100 $ 2,131,183,101 $ 17,894 32.2 16,201 9.0% 68,041 2006 119,100 2,130,460,800 17,888 32.4 16,014 8.4% 67,023 2007 119,100 2,129,750,646 17,882 32.5 15,178 8.9% 66,224 2008 119,100 2,129,040,730 17,876 32.7 14,475 10.2% 65,833 2009 119,100 2,128,331,049 17,870 32.8 14,482 16.2% 66,822 2010 119,100 2,127,621,606 17,864 32.9 14,098 15.0% 64,074 2011 114,297 2,218,237,360 19,408 30.4 13,465 13.1% 63,130 2012 114,297 2,259,194,502 19,766 32.4 13,236 11.3% 63,374 2013 114,297 2,259,194,502 19,766 32.2 12,544 11.9% 63,181 2014 114,297 2,221,933,680 19,440 32.2 12,088 9.1% 63,102 (')Source: U.S. Census Bureau �L Source: personal income for 2000 and 2005 from the U.S. Census Bureau; other years were extrapolated from 2000 and 2005 Source: 2000 data from U.S. Census Bureau. Data for other years estimated by City of Lansing Finance Department (4)Source: Lansing School District (')Source: Michigan Department of Career Development: Employment Service Agency- Labor Market Information 189 CITY OF LANSING, MICHIGAN Table 15-Unaudited Principal Employers Current Year and Eight Years Ago 2014 2006 Percentage Percentage of Total City of Total City Employer Employees(') Rank Employment(2) Employees(') Rank Employment State of Michigan 13,700 1 6.11% 13,000 1 6.09% Michigan State University 10,725 2 4.78% 10,500 2 4.45% Sparrow Health System 5,735 3 2.56% 6,000 4 2.54% General Motors 5,522 5 2.46% 6,300 3 2.67% Liberty National Life Insurance 5,000 4 2.23% Lansing Community College 2,990 6 1.33% 3,800 5 1.35% McClaren Greater Lansing 2,400 7 1.07% 2,500 7 1.06% Meijer 1,880 8 0.84% 2,000 8 0.85% Lansing School District 1,613 9 0.72% 3,000 6 0.89% Auto Owner's Insurance 1,500 10 0.67% 1,500 9 0.64% Peckham, Inc. 1,400 11 0.62% Jackson National Life Insurance 1,393 12 0.62% Ingham County 1,200 10 0.52% Greater Lansing metropolitan area employment 224,197 Data is representative of the Greater Lansing Region Z Source: Michigan Department of Career Development: Employment Service Agency- Labor Market Information Data prior to 2006 is unavailable 190 CITY OF LANSING, MICHIGAN Table 16-Unaudited Full-time Equivalent City Governmental Employees by Function/Program Last Nine Fiscal Years Function/Program 2014 2013 2012 2011 2010 20IMM MMINWM MMqMW Mi General government City council 10 10 10 11 11 11 11 11 11 Mayors office 5 5 5 5 5 5 5 5 7 City clerk 5 5 5 6 7 7 7 7 7 54-A district court 43 43 48 50 53 53 53 55 55 City attorneys office 10 10 10 11 12 12 12 12 11 City TV 2 2 2 2 2 2 2 2 2 Internal auditor 1 1 1 1 1 1 1 1 2 Human resources 10 9 9 11 12 13 14 14 (1) 12 Information technology 11 10 10 14 15 17 18 18 18 Finance Accounting/Budget/Purchasing 10 10 13 14 16 17 16 18 (1) 21 Tax services 20 20 21 22 24 25 26 29 30 Property management (6) 18 20 21 23 24 26 (3) 28 Fleet management (6) 27 29 30 31 33 37 (`) 20 30 30 79 99 106 113 117 128 117 Planning Et neighborhood development Administration 2 2 2 2 2 2 2 2 2 Code compliance a) 15 15 16 16 16 17 19 15 Building safety 13 12 13 15 15 15 15 16 17 Planning 4 4 4 5 5 4 5 7 7 Development 11 9 9 9 9 10 10 10 11 Parking 23 transportation 15 20 20 20 (5) 40 41 41 43 49 45 62 63 66 87 88 90 97 101 Police 234 (a) 229 (') 260 327 344 342 341 338 339 Fire 188 180 179 207 218 219 219 219 220 Code compliance 14 (a) Public services - Administration£t engineering 19 19 21 21 17 18 18 18 19 Operations Et maintenance 117 (") 120 121 135 (') 110 113 113 119 122 Service garage - - - - - - - 17 Wastewater 41 41 41 41 44 50 50 51 61 Property Management 18 18 (6) Fleet Management 27 27 (6) 222 225 183 197 171 181 181 188 219 Human relations 8 community services 6 5 5 5 5 6 8 9 9 Parks li recreation Administration l3 design 6 5 5 5 7 7 8 8 9 Grounds 8t forestry 27 31 32 32 (`) 32 Leisure 8 special recreation 6 8 10 12 15 19 17 19 ') 20 Cemeteries 1 1 1 1 3 4 4 5 5 Golf/ice arena 3 3 3 4 4 4 4 4 6 Zoo(4) - - - 18 19 16 17 19 22 56 65 65 86 91 827 833 878 1,020 1,090 1,118 1,126 1,172 1,203 Source: The City of Lansing Data available back nine years only In FY 2007,the following restructuring of departments occurred: (1)A payroll position was transferred from Finance to Human Resources (2)Operations Of the City's three fleet garages was consolidated in Finance (3)Four custodial positions were transferred from Parks it Recreation to Finance (4)on Jury 1,2007,Potter Park Zoo employees were transferred to Ingham County In FY 2011,the following restructuring of departments occurred: (5)Grounds Maintenance positions were moved from Parks li Recreation and Planning tt Neighborhood Development and consolidated with Public Service staff In FY 2013,the following restructuring g of departments occurred: (6)Fleet and Property Management were moved from the Finance Department to the Public Service Department (7)on June 27,2012,911 Dispatch employees were transferred from the City to Ingham County In FY 2014,the following restructuring g of departments occurred: (8)Fourteen(14)positions are transferred from PND to Fire;four(4)to Police,and one(1)to Public Service for FY 2014 191 CITY OF LANSING, MICHIGAN Table 17-Unaudited Operating Indicators by Function/Program Last Nine Fiscal Years Function/Program 2014 2012 2011 ' 20' Public safety Fire department responses 19,427 18,444 17,093 16,974 16,659 15,852 15,780 15,267 14,869 EMS related 16,235 15,918 14,851 14,628 14,398 13,447 13,151 12,779 12,152 Fire related 3,012 2,526 2,242 2,346 2,261 2,405 2,629 2,488 2,117 Police department responses 76,855 73,087 74,058 78,112 87,724 89,958 87,634 97,466 87,551 Arrests 5,656 7,196 8,043 8,858 11,644 11,559 12,810 13,260 7,479 Traffic violations 7,756 14,905 8,829 15,585 18,297 20,122 25,398 29,047 30,948 Public works Potholes filled 55,193 33,155 30,116 32,918 24,945 43,601 40,790 28,122 36,522 Streets resurfaced(miles) 4.60 6.00 5.01 8.99 20.70 16.20 20.92 22.11 27.16 Recreation Recreation participation 50,859 55,122 66,836 66,254 70,529 39,060 37,783 ' 41,069 38,878 Pavilion rentals 185 199 198 161 288 315 341 254 255 Sewage disposal Average amount processed daily(gal) 14.49 million 14.75 million 12.82 million 12.83 million 15.01 million 18.15 million 16.73 million 16.00 million 15.00 millio Parking system Average number of monthly permits 2,891 2,718 2,735 3,122 3,480 3,783 4,059 3,905 4,073 Parking tickets issued 34,373 38,127 41,829 45,176 63,610 66,183 57,153 75,637 82,221 Cemetery Lots sold 93 113 115 143 142 119 98 114 104 Golf Annual rounds played 22,786 25,554 28,560 26,084 30,936 41,588 43,605 ` 59,244 57,256 Garbage and rubbish Yards sent to landfill 18,829 17,985 18,705 20,334 21,805 29,322 29,869 30,402 30,517 Recycling Recycled goods sold(tons) 5,075 3,562 3,149 2,446 2,163 2,591 2,818 2,269 2,441 Yards composted 25,260 21,832 20,413 15,725 21,819 21,871 21,928 17,189 21,304 Source: The City of Lansing Data available back nine years only " The addition of the Southside Community Center,with a pool,resulted in a large increase in recreation participation in FY 2010 " Two golf course were closed in FY 2008 with one of those being converted to a driving range Source: City of Lansing 192 CITY OF LANSING, MICHIGAN Table 18-Unaudited Capital Assets Statistics by Function/Program Last Nine Fiscal Years Function/Program 2014 2013 2012 2011 2010 2009 2008 2007 2006 Public safety Police stations 2 2 2 3 3 3 3 3 3 Police patrol units 61 60 60 58 61 61 58 55 55 Fire stations 6 6 6 8 9 9 9 9 9 Public works Streets(mites) 411.00 411.00 407.80 410.80 410.63 410.15 410.15 410 409.89 Traffic signals 200 204 204 208 203 196 203 188 194 Recreation Park acreage 2,364.85 2,364.85 2,434.88 2,422.63 2,422.63 2,422.63 2,422.63 2,219.63 2,219.63 Playgrounds 72 75 73 71 71 82 82 80 76 Baseball/softball fields 61 61 61 61 61 61 61 61 61 Soccer/football fields 6 6 6 6 6 6 6 6 6 Community centers 4 4 4 4 4 4 4 4 4 Sewage disposal Sanitary sewers(miles) 359 359 359 359 357 354 347.4 341.0 338.0 Storm sewers(miles) 234 234 234 234 233 230 225.1 220.0 217.0 Combined sewers(miles) 188 188 188 188 191 192 197.4 203.0 208.0 Parking system Ramps 4 4 4 4 4 4 6 6 5 Lots 17 18 15 15 16 16 15 15 15 Meters 21452 2,452 2,452 2,452 2,493 2,493 2,489 2,489 2,489 Cemetery Number of cemeteries 3 3 3 3 3 3 3 3 3 Golf Number of courses 1 1 1 1 1 1 1 b 3 3 Acreage 115 115 115 115 115 115 115 b 318 318 Garbage and rubbish Refuse collection trucks 17 17 19 22 18 16 21 21 20 Recycling Recycling trucks 7 7 7 9 10 10 10 10 10 Potter park zoo Number of animals N/A N/A N/A N/A N/A N/A N/A a 398 403 Source: The City of Lansing Data available back nine years only a. Zoo operations were transferred to Ingham County in FY2008 b.Two municipal golf courses were non-operational beginning in 2008 193